[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 256 Introduced in Senate (IS)]







108th CONGRESS
  1st Session
                                 S. 256

 To provide incentives for charitable contributions by individuals and 
 businesses, to improve the public disclosure of activities of exempt 
 organizations, and to enhance the ability of low-income Americans to 
  gain financial security by building assets, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 30, 2003

Mr. Grassley (for himself, Mr. Baucus, Mr. Santorum, and Mr. Lieberman) 
introduced the following bill; which was read twice and referred to the 
                          Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To provide incentives for charitable contributions by individuals and 
 businesses, to improve the public disclosure of activities of exempt 
 organizations, and to enhance the ability of low-income Americans to 
  gain financial security by building assets, 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; ETC.

    (a) Short Title.--This Act may be cited as the ``CARE Act of 
2003''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; etc.
                 TITLE I--CHARITABLE GIVING INCENTIVES

Sec. 101. Deduction for portion of charitable contributions to be 
                            allowed to individuals who do not itemize 
                            deductions.
Sec. 102. Tax-free distributions from individual retirement accounts 
                            for charitable purposes.
Sec. 103. Charitable deduction for contributions of food inventories.
Sec. 104. Charitable deduction for contributions of book inventories.
Sec. 105. Expansion of charitable contribution allowed for scientific 
                            property used for research and for computer 
                            technology and equipment used for 
                            educational purposes.
Sec. 106. Modifications to encourage contributions of capital gain real 
                            property made for conservation purposes.
Sec. 107. Exclusion of 25 percent of gain on sales or exchanges of land 
                            or water interests to eligible entities for 
                            conservation purposes.
Sec. 108. Tax exclusion for cost-sharing payments under Partners for 
                            Fish and Wildlife Program.
Sec. 109. Adjustment to basis of S corporation stock for certain 
                            charitable contributions.
Sec. 110. Enhanced deduction for charitable contribution of literary, 
                            musical, artistic, and scholarly 
                            compositions.
Sec. 111. Mileage reimbursements to charitable volunteers excluded from 
                            gross income.
        TITLE II--IMPROVE OVERSIGHT OF TAX-EXEMPT ORGANIZATIONS

Sec. 201. Disclosure of written determinations.
Sec. 202. Disclosure of Internet web site and name under which 
                            organization does business.
Sec. 203. Modification to reporting capital transactions.
Sec. 204. Disclosure that Form 990 is publicly available.
Sec. 205. Disclosure to State officials of proposed actions related to 
                            section 501(c) organizations.
Sec. 206. Expansion of penalties to preparers of Form 990.
Sec. 207. Notification requirement for entities not currently required 
                            to file.
Sec. 208. Suspension of tax-exempt status of terrorist organizations.
     TITLE III--OTHER CHARITABLE AND EXEMPT ORGANIZATION PROVISIONS

Sec. 301. Modification of excise tax on unrelated business taxable 
                            income of charitable remainder trusts.
Sec. 302. Modifications to section 512(b)(13).
Sec. 303. Simplification of lobbying expenditure limitation.
Sec. 304. Expedited review process for certain tax-exemption 
                            applications.
Sec. 305. Clarification of definition of church tax inquiry.
Sec. 306. Expansion of declaratory judgment remedy to tax-exempt 
                            organizations.
Sec. 307. Definition of convention or association of churches.
Sec. 308. Payments by charitable organizations to victims of war on 
                            terrorism.
Sec. 309. Modification of scholarship foundation rules.
Sec. 310. Treatment of certain hospital support organizations as 
                            qualified organizations for purposes of 
                            determining acquisition indebtedness.
                 TITLE IV--SOCIAL SERVICES BLOCK GRANT

Sec. 401. Restoration of funds for the Social Services Block Grant.
Sec. 402. Restoration of authority to transfer up to 10 percent of TANF 
                            funds to the Social Services Block Grant.
Sec. 403. Requirement to submit annual report on State activities.
                TITLE V--INDIVIDUAL DEVELOPMENT ACCOUNTS

Sec. 501. Short title.
Sec. 502. Purposes.
Sec. 503. Definitions.
Sec. 504. Structure and administration of qualified individual 
                            development account programs.
Sec. 505. Procedures for opening and maintaining an individual 
                            development account and qualifying for 
                            matching funds.
Sec. 506. Deposits by qualified individual development account 
                            programs.
Sec. 507. Withdrawal procedures.
Sec. 508. Certification and termination of qualified individual 
                            development account programs.
Sec. 509. Reporting, monitoring, and evaluation.
Sec. 510. Authorization of appropriations.
Sec. 511. Matching funds for individual development accounts provided 
                            through a tax credit for qualified 
                            financial institutions.
Sec. 512. Account funds disregarded for purposes of certain means-
                            tested Federal programs.
              TITLE VI--MANAGEMENT OF EXEMPT ORGANIZATIONS

Sec. 601. Authorization of appropriations.

                 TITLE I--CHARITABLE GIVING INCENTIVES

SEC. 101. DEDUCTION FOR PORTION OF CHARITABLE CONTRIBUTIONS TO BE 
              ALLOWED TO INDIVIDUALS WHO DO NOT ITEMIZE DEDUCTIONS.

    (a) In General.--Section 170 (relating to charitable, etc., 
contributions and gifts) is amended by redesignating subsection (m) as 
subsection (n) and by inserting after subsection (l) the following new 
subsection:
    ``(m) Deduction for Individuals Not Itemizing Deductions.--In the 
case of an individual who does not itemize deductions for any taxable 
year, there shall be taken into account as a direct charitable 
deduction under section 63 an amount equal to the amount allowable 
under subsection (a) for the taxable year for cash contributions, but 
only with respect to such contributions which exceed $250 ($500 in the 
case of a joint return), but do not exceed $500 ($1,000 in the case of 
a joint return).''.
    (b) Direct Charitable Deduction.--
            (1) In general.--Subsection (b) of section 63 (defining 
        taxable income) is amended by striking ``and'' at the end of 
        paragraph (1), by striking the period at the end of paragraph 
        (2) and inserting ``, and'', and by adding at the end the 
        following new paragraph:
            ``(3) the direct charitable deduction.''.
            (2) Definition.--Section 63 is amended by redesignating 
        subsection (g) as subsection (h) and by inserting after 
        subsection (f) the following new subsection:
    ``(g) Direct Charitable Deduction.--For purposes of this section, 
the term `direct charitable deduction' means that portion of the amount 
allowable under section 170(a) which is taken as a direct charitable 
deduction for the taxable year under section 170(m).''.
            (3) Conforming amendment.--Subsection (d) of section 63 is 
        amended by striking ``and'' at the end of paragraph (1), by 
        striking the period at the end of paragraph (2) and inserting 
        ``, and'', and by adding at the end the following new 
        paragraph:
            ``(3) the direct charitable deduction.''.
    (c) Study.--
            (1) In general.--The Secretary of the Treasury shall study 
        the effect of the amendments made by this section on increased 
        charitable giving and taxpayer compliance, including a 
        comparison of taxpayer compliance by those who itemize their 
        charitable contributions with those who claim a direct 
        charitable deduction.
            (2) Report.--By not later than December 31, 2004, the 
        Secretary of the Treasury shall report on the study required 
        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 taxable years beginning after December 31, 2002, and before 
January 1, 2005.

SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS 
              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.--
                    ``(A) In general.--No amount shall be includible in 
                gross income by reason of a qualified charitable 
                distribution.
                    ``(B) Qualified charitable distribution.--For 
                purposes of this paragraph, the term `qualified 
                charitable distribution' means any distribution from an 
                individual retirement account--
                            ``(i) which is made directly by the 
                        trustee--
                                    ``(I) to an organization described 
                                in section 170(c), or
                                    ``(II) to a split-interest entity, 
                                and
                            ``(ii) which is made on or after the date 
                        that the individual for whose benefit the 
                        account is maintained has attained--
                                    ``(I) in the case of any 
                                distribution described in clause 
                                (i)(I), age 70\1/2\, and
                                    ``(II) in the case of any 
                                distribution described in clause 
                                (i)(II), age 59\1/2\.
                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 subparagraph (A) and, in the case of 
                a distribution to a split-interest entity, only if no 
                person holds an income interest in the amounts in the 
                split-interest entity attributable to such distribution 
                other than one or more of the following: the individual 
                for whose benefit such account is maintained, the 
                spouse of such individual, or any organization 
                described in section 170(c).
                    ``(C) Contributions must be otherwise deductible.--
                For purposes of this paragraph--
                            ``(i) Direct contributions.--A distribution 
                        to an organization described in section 170(c) 
                        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).
                            ``(ii) Split-interest gifts.--A 
                        distribution to a split-interest entity shall 
                        be treated as a qualified charitable 
                        distribution only if a deduction for the entire 
                        value of the interest in the distribution for 
                        the use of an organization described in section 
                        170(c) 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 be so 
                includible if all amounts were distributed from all 
                individual retirement accounts otherwise taken into 
                account in determining the inclusion on such 
                distribution under section 72. Proper adjustments shall 
                be made in applying section 72 to other distributions 
                in such taxable year and subsequent taxable years.
                    ``(E) Special rules for split-interest entities.--
                            ``(i) Charitable remainder trusts.--
                        Notwithstanding section 664(b), distributions 
                        made from a trust described in subparagraph 
                        (G)(i) shall be treated as ordinary income in 
                        the hands of the beneficiary to whom is paid 
                        the annuity described in section 664(d)(1)(A) 
                        or the payment described in section 
                        664(d)(2)(A).
                            ``(ii) Pooled income funds.--No amount 
                        shall be includible in the gross income of a 
                        pooled income fund (as defined in subparagraph 
                        (G)(ii)) by reason of a qualified charitable 
                        distribution to such fund, and all 
                        distributions from the fund which are 
                        attributable to qualified charitable 
                        distributions shall be treated as ordinary 
                        income to the beneficiary.
                            ``(iii) Charitable gift annuities.--
                        Qualified charitable distributions made for a 
                        charitable gift annuity shall not be treated as 
                        an investment in the contract.
                    ``(F) Denial of deduction.--Qualified charitable 
                distributions shall not be taken into account in 
                determining the deduction under section 170.
                    ``(G) Split-interest entity defined.--For purposes 
                of this paragraph, the term `split-interest entity' 
                means--
                            ``(i) a charitable remainder annuity trust 
                        or a charitable remainder unitrust (as such 
                        terms are defined in section 664(d)) which must 
                        be funded exclusively by qualified charitable 
                        distributions,
                            ``(ii) a pooled income fund (as defined in 
                        section 642(c)(5)), but only if the fund 
                        accounts separately for amounts attributable to 
                        qualified charitable distributions, and
                            ``(iii) a charitable gift annuity (as 
                        defined in section 501(m)(5)).''.
    (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:

``SEC. 6034. RETURNS BY TRUSTS DESCRIBED IN SECTION 4947(A)(2) OR 
              CLAIMING CHARITABLE DEDUCTIONS UNDER SECTION 642(C).

    ``(a) Trusts Described in Section 4947(a)(2).--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 a Charitable Deduction Under Section 
642(c).--
            ``(1) In general.--Every trust not required to file a 
        return under subsection (a) but claiming a charitable, etc., 
        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 charitable, etc., deduction 
                taken under section 642(c) within such year,
                    ``(B) the amount paid out within such year which 
                represents amounts for which charitable, etc., 
                deductions under section 642(c) have been taken in 
                prior years,
                    ``(C) the amount for which charitable, etc., 
                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 charitable, etc., purposes,
                    ``(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 in the 
        case of a taxable year if 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. Paragraph (1) shall not apply in the case of a 
        trust described in section 4947(a)(1).''.
            (2) Increase in penalty relating to filing of information 
        return by split-interest trusts.--Paragraph (2) of section 
        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.''.
            (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).''.
    (c) Effective Dates.--
            (1) Subsection (a).--The amendment made by subsection (a) 
        shall apply to distributions made after the date of the 
        enactment.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to returns for taxable years beginning after 
        December 31, 2003.

SEC. 103. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD INVENTORIES.

    (a) In General.--Subsection (e) of section 170 (relating to certain 
contributions of ordinary income and capital gain property) is amended 
by adding at the end the following new paragraph:
            ``(7) Application of paragraph (3) to certain contributions 
        of food inventory.--For purposes of this section--
                    ``(A) Extension to individuals.--In the case of a 
                charitable contribution of apparently wholesome food--
                            ``(i) paragraph (3)(A) shall be applied 
                        without regard to whether the contribution is 
                        made by a C corporation, and
                            ``(ii) in the case of a taxpayer other than 
                        a C corporation, the aggregate amount of such 
                        contributions from any trade or business (or 
                        interest therein) of the taxpayer for any 
                        taxable year which may be taken into account 
                        under this section shall not exceed 10 percent 
                        of the taxpayer's net income from any such 
                        trade or business, computed without regard to 
                        this section, for such taxable year.
                    ``(B) Limitation on reduction.--In the case of a 
                charitable contribution of apparently wholesome food, 
                notwithstanding paragraph (3)(B), the amount of the 
                reduction determined under paragraph (1)(A) shall not 
                exceed the amount by which the fair market value of 
                such property exceeds twice the basis of such property.
                    ``(C) Determination of basis.--If a taxpayer--
                            ``(i) does not account for inventories 
                        under section 471, and
                            ``(ii) is not required to capitalize 
                        indirect costs under section 263A,
                the taxpayer may elect, solely for purposes of 
                paragraph (3)(B), to treat the basis of any apparently 
                wholesome food as being equal to 25 percent of the fair 
                market value of such food.
                    ``(D) Determination of fair market value.--In the 
                case of a charitable contribution of apparently 
                wholesome food which is a qualified contribution 
                (within the meaning of paragraph (3), as modified by 
                subparagraph (A) of this paragraph) and which, solely 
                by reason of internal standards of the taxpayer or lack 
of market, cannot or will not be sold, the fair market value of such 
contribution shall be determined--
                            ``(i) without regard to such internal 
                        standards or such lack of market and
                            ``(ii) by taking into account the price at 
                        which the same or substantially the same food 
                        items (as to both type and quality) are sold by 
                        the taxpayer at the time of the contribution 
                        (or, if not so sold at such time, in the recent 
                        past).
                    ``(E) Apparently wholesome food.--For purposes of 
                this paragraph, the term `apparently wholesome food' 
                has the meaning given such term by section 22(b)(2) of 
                the Bill Emerson Good Samaritan Food Donation Act (42 
                U.S.C. 1791(b)(2)), as in effect on the date of the 
                enactment of this paragraph.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made after the date of the enactment of this Act.

SEC. 104. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF BOOK INVENTORIES.

    (a) In General.--Section 170(e)(3) (relating to certain 
contributions of ordinary income and capital gain property) is amended 
by redesignating subparagraph (C) as subparagraph (D) and by inserting 
after subparagraph (B) the following new subparagraph:
                    ``(C) Special rule for contributions of book 
                inventory for educational purposes.--
                            ``(i) Contributions of book inventory.--In 
                        determining whether a qualified book 
                        contribution is a qualified contribution, 
                        subparagraph (A) shall be applied without 
                        regard to whether--
                                    ``(I) the donee is an organization 
                                described in the matter preceding 
                                clause (i) of subparagraph (A), and
                                    ``(II) the property is to be used 
                                by the donee solely for the care of the 
                                ill, the needy, or infants.
                            ``(ii) Amount of reduction.--
                        Notwithstanding subparagraph (B), the amount of 
                        the reduction determined under paragraph (1)(A) 
                        shall not exceed the amount by which the fair 
                        market value of the contributed property (as 
                        determined by the taxpayer using a bona fide 
                        published market price for such book) exceeds 
                        twice the basis of such property.
                            ``(iii) Qualified book contribution.--For 
                        purposes of this paragraph, the term `qualified 
                        book contribution' means a charitable 
                        contribution of books, but only if the 
                        requirements of clauses (iv) and (v) are met.
                            ``(iv) Identity of donee.--The requirement 
                        of this clause is met if the contribution is to 
                        an organization--
                                    ``(I) described in subclause (I) or 
                                (III) of paragraph (6)(B)(i), or
                                    ``(II) described in section 
                                501(c)(3) and exempt from tax under 
                                section 501(a) (other than a private 
                                foundation, as defined in section 
                                509(a), which is not an operating 
                                foundation, as defined in section 
                                4942(j)(3)), which is organized 
                                primarily to make books available to 
                                the general public at no cost or to 
                                operate a literacy program.
                            ``(v) Certification by donee.--The 
                        requirement of this clause is met if, in 
                        addition to the certifications required by 
                        subparagraph (A) (as modified by this 
                        subparagraph), the donee certifies in writing 
                        that--
                                    ``(I) the books are suitable, in 
                                terms of currency, content, and 
                                quantity, for use in the donee's 
                                educational programs, and
                                    ``(II) the donee will use the books 
                                in its educational programs.
                            ``(vi) Bona fide published market price.--
                        For purposes of this subparagraph, the term 
                        `bona fide published market price' means, with 
                        respect to any book, a price--
                                    ``(I) determined using the same 
                                printing and edition,
                                    ``(II) published within 7 years 
                                preceding the contribution of such 
                                book,
                                    ``(III) determined as a result of 
                                an arm's length transaction, and
                                    ``(IV) for which such a book has 
                                been customarily sold.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to contributions made after the date of the enactment of this Act

SEC. 105. EXPANSION OF CHARITABLE CONTRIBUTION ALLOWED FOR SCIENTIFIC 
              PROPERTY USED FOR RESEARCH AND FOR COMPUTER TECHNOLOGY 
              AND EQUIPMENT USED FOR EDUCATIONAL PURPOSES.

    (a) Scientific Property Used for Research.--
            (1) In general.--Clause (ii) of section 170(e)(4)(B) 
        (defining qualified research contributions) is amended by 
        inserting ``or assembled'' after ``constructed''.
            (2) Conforming amendment.--Clause (iii) of section 
        170(e)(4)(B) is amended by inserting ``or assembling'' after 
        ``construction''.
    (b) Computer Technology and Equipment for Educational Purposes.--
            (1) In general.--Clause (ii) of section 170(e)(6)(B) is 
        amended by inserting ``or assembled'' after ``constructed'' and 
        ``or assembling'' after ``construction''.
            (2) Special rule made permanent.--Section 170(e)(6) is 
        amended by striking subparagraph (G).
            (3) Conforming amendments.--Subparagraph (D) of section 
        170(e)(6) is amended by inserting ``or assembled'' after 
        ``constructed'' and ``or assembling'' after ``construction''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.

SEC. 106. MODIFICATIONS TO ENCOURAGE CONTRIBUTIONS OF CAPITAL GAIN REAL 
              PROPERTY MADE FOR CONSERVATION PURPOSES.

    (a) In General.--Section 170(h) (relating to qualified conservation 
contribution) is amended by adding at the end the following new 
paragraph:
            ``(7) Additional incentives for qualified conservation 
        contributions.--
                    ``(A) In general.--In the case of any qualified 
                conservation contribution (as defined in paragraph (1)) 
                made by an individual--
                            ``(i) subparagraph (C) of subsection (b)(1) 
                        shall not apply,
                            ``(ii) except as provided in subparagraph 
                        (B)(i), subsections (b)(1)(A) and (d)(1) shall 
                        be applied separately with respect to such 
                        contributions by treating references to 50 
                        percent of the taxpayer's contribution base as 
references to the amount of such percentage of such base reduced by the 
amount of other contributions allowable under subsection (b)(1)(A), and
                            ``(iii) subparagraph (A) of subsection 
                        (d)(1) shall be applied--
                                    ``(I) by substituting `15 
                                succeeding taxable years' for `5 
                                succeeding taxable years', and
                                    ``(II) by applying clause (ii) to 
                                each of the 15 succeeding taxable 
                                years.
                    ``(B) Special rules for eligible farmers and 
                ranchers.--
                            ``(i) In general.--In the case of any such 
                        contributions made by an eligible farmer or 
                        rancher--
                                    ``(I) if the taxpayer is an 
                                individual, subsections (b)(1)(A) and 
                                (d)(1) shall be applied separately with 
                                respect to such contributions by 
                                substituting `the taxpayer's 
                                contribution base reduced by the amount 
                                of other contributions allowable under 
                                subsection (b)(1)(A)' for `50 percent 
                                of the taxpayer's contribution base' 
                                each place it appears, and
                                    ``(II) if the taxpayer is a 
                                corporation, subsections (b)(2) and 
                                (d)(2) shall be applied separately with 
                                respect to such contributions, 
                                subsection (b)(2) shall be applied with 
                                respect to such contributions as if 
                                such subsection did not contain the 
                                words `10 percent of' and as if 
                                subparagraph (A) thereof read `the 
                                deduction under this section for 
                                qualified conservation contributions', 
                                and rules similar to the rules of 
                                subparagraph (A)(iii) shall apply for 
                                purposes of subsection (d)(2).
                            ``(ii) Definition.--For purposes of clause 
                        (i), the term `eligible 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 at least 51 
                        percent of the taxpayer's gross income for the 
                        taxable year, and, in the case of a C 
                        corporation, the stock of which is not publicly 
                        traded on a recognized exchange.''.
    (c) Effective Date.--The amendment made by this section shall apply 
to contributions made after the date of the enactment of this Act.

SEC. 107. EXCLUSION OF 25 PERCENT OF GAIN ON SALES OR EXCHANGES OF LAND 
              OR WATER INTERESTS TO ELIGIBLE ENTITIES FOR CONSERVATION 
              PURPOSES.

    (a) In General.--Part III of subchapter B of chapter 1 (relating to 
items specifically excluded from gross income) is amended by inserting 
after section 121 the following new section:

``SEC. 121A. 25-PERCENT EXCLUSION OF GAIN ON SALES OR EXCHANGES OF LAND 
              OR WATER INTERESTS TO ELIGIBLE ENTITIES FOR CONSERVATION 
              PURPOSES.

    ``(a) Exclusion.--Gross income shall not include 25 percent of the 
qualifying gain from a conservation sale of a long-held qualifying land 
or water interest.
    ``(b) Qualifying Gain.--For purposes of this section--
            ``(1) In general.--The term `qualifying gain' means any 
        gain which would be recognized as long-term capital gain, 
        reduced by the amount of any long-term capital gain 
        attributable to disqualified improvements.
            ``(2) Disqualified improvement.--For purposes of paragraph 
        (1), the term `disqualified improvement' means any building, 
        structure, or other improvement, other than--
                    ``(A) any improvement which is described in section 
                175(c)(1), determined--
                            ``(i) without regard to the requirements 
                        that the taxpayer be engaged in farming, and
                            ``(ii) without taking into account 
                        subparagraphs (A) and (B) thereof, or
                    ``(B) any improvement which the Secretary 
                determines directly furthers conservation purposes.
            ``(3) Special rule for sales of stock.--If the long-held 
        qualifying land or water interest is 1 or more shares of stock 
        in a qualifying land or water corporation, the qualifying gain 
        is equal to the lesser of--
                    ``(A) the qualifying gain determined under 
                paragraph (1), or
                    ``(B) the product of--
                            ``(i) the percentage of such corporation's 
                        stock which is transferred by the taxpayer, 
                        times
                            ``(ii) the amount which would have been the 
                        qualifying gain (determined under paragraph 
                        (1)) if there had been a conservation sale by 
                        such corporation of all of its interests in the 
                        land and water for a price equal to the product 
                        of the fair market value of such interests 
                        times the ratio of--
                                    ``(I) the proceeds of the 
                                conservation sale of the stock, to
                                    ``(II) the fair market value of the 
                                stock which was the subject of the 
                                conservation sale.
    ``(c) Conservation Sale.--For purposes of this section, the term 
`conservation sale' means a sale or exchange which meets the following 
requirements:
            ``(1) Transferee is an eligible entity.--The transferee of 
        the long-held qualifying land or water interest is an eligible 
        entity.
            ``(2) Qualifying letter of intent required.--At the time of 
        the sale or exchange, such transferee provides the taxpayer 
with a qualifying letter of intent.
            ``(3) Nonapplication to certain sales.--The sale or 
        exchange is not made pursuant to an order of condemnation or 
        eminent domain.
            ``(4) Controlling interest in stock sale required.--In the 
        case of the sale or exchange of stock in a qualifying land or 
        water corporation, at the end of the taxpayer's taxable year in 
        which such sale or exchange occurs, the transferee's ownership 
        of stock in such corporation meets the requirements of section 
        1504(a)(2) (determined by substituting `90 percent' for `80 
        percent' each place it appears).
    ``(d) Long-Held Qualifying Land or Water Interest.--For purposes of 
this section--
            ``(1) In general.--The term `long-held qualifying land or 
        water interest' means any qualifying land or water interest 
        owned by the taxpayer or a member of the taxpayer's family (as 
        defined in section 2032A(e)(2)) at all times during the 5-year 
        period ending on the date of the sale.
            ``(2) Qualifying land or water interest.--
                    ``(A) In general.--The term `qualifying land or 
                water interest' means a real property interest which 
                constitutes--
                            ``(i) a taxpayer's entire interest in land,
                            ``(ii) a taxpayer's entire interest in 
                        water rights,
                            ``(iii) a qualified real property interest 
                        (as defined in section 170(h)(2)), or
                            ``(iv) stock in a qualifying land or water 
                        corporation.
                    ``(B) Entire interest.--For purposes of clause (i) 
                or (ii) of subparagraph (A)--
                            ``(i) a partial interest in land or water 
                        is not a taxpayer's entire interest if an 
                        interest in land or water was divided in order 
                        to create such partial interest in order to 
                        avoid the requirements of such clause or 
                        section 170(f)(3)(A), and
                            ``(ii) a taxpayer's entire interest in 
                        certain land does not fail to satisfy 
                        subparagraph (A)(i) solely because the taxpayer 
                        has retained an interest in other land, even if 
                        the other land is contiguous with such certain 
                        land and was acquired by the taxpayer along 
                        with such certain land in a single conveyance.
    ``(e) Other Definitions.--For purposes of this section--
            ``(1) Eligible entity.--The term `eligible entity' means--
                    ``(A) a governmental unit referred to in section 
                170(c)(1), or an agency or department thereof operated 
                primarily for 1 or more of the conservation purposes 
                specified in clause (i), (ii), or (iii) of section 
                170(h)(4)(A), or
                    ``(B) an entity which is--
                            ``(i) described in section 170(b)(1)(A)(vi) 
                        or section 170(h)(3)(B), and
                            ``(ii) organized and at all times operated 
                        primarily for 1 or more of the conservation 
                        purposes specified in clause (i), (ii), or 
                        (iii) of section 170(h)(4)(A).
            ``(2) Qualifying letter of intent.--The term `qualifying 
        letter of intent' means a written letter of intent which 
        includes the following statement: `The transferee's intent is 
        that this acquisition will serve 1 or more of the conservation 
        purposes specified in clause (i), (ii), or (iii) of section 
        170(h)(4)(A) of the Internal Revenue Code of 1986, that the 
        transferee's use of the property so acquired will be consistent 
        with section 170(h)(5) of such Code, and that the use of the 
        property will continue to be consistent with such section, even 
        if ownership or possession of such property is subsequently 
        transferred to another person.'
            ``(3) Qualifying land or water corporation.--The term 
        `qualifying land or water corporation' means a C corporation 
        (as defined in section 1361(a)(2)) if, as of the date of the 
        conservation sale--
                    ``(A) the fair market value of the corporation's 
                interests in land or water held by the corporation at 
                all times during the preceding 5 years equals or 
                exceeds 90 percent of the fair market value of all of 
                such corporation's assets, and
                    ``(B) not more than 50 percent of the total fair 
                market value of such corporation's assets consists of 
                water rights or infrastructure related to the delivery 
                of water, or both.
    ``(f) Tax on Subsequent Transfers or Removals of Conservation 
Restrictions.--
            ``(1) In general.--A tax is hereby imposed on any 
        subsequent--
                    ``(A) transfer by an eligible entity of ownership 
                or possession, whether by sale, exchange, or lease, of 
                property acquired directly or indirectly in--
                            ``(i) a conservation sale described in 
                        subsection (a), or
                            ``(ii) a transfer described in clause (i), 
                        (ii), or (iii) of paragraph (4)(A), or
                    ``(B) removal of a conservation restriction 
                contained in an instrument of conveyance of such 
                property.
            ``(2) Amount of tax.--The amount of tax imposed by 
        paragraph (1) on any transfer or removal shall be equal to the 
        sum of--
                    ``(A) either--
                            ``(i) 20 percent of the fair market value 
                        (determined at the time of the transfer) of the 
                        property the ownership or possession of which 
                        is transferred, or
                            ``(ii) 20 percent of the fair market value 
                        (determined at the time immediately after the 
                        removal) of the property upon which the 
                        conservation restriction was removed, plus
                    ``(B) the product of--
                            ``(i) the highest rate of tax specified in 
                        section 11, times
                            ``(ii) any gain or income realized by the 
                        transferor or person removing such restriction 
                        as a result of the transfer or removal.
            ``(3) Liability.--The tax imposed by paragraph (1) shall be 
        paid--
                    ``(A) on any transfer, by the transferor, and
                    ``(B) on any removal of a conservation restriction 
                contained in an instrument of conveyance, by the person 
                removing such restriction.
            ``(4) Relief from liability.--The person (otherwise liable 
        for any tax imposed by paragraph (1)) shall be relieved of 
        liability for the tax imposed by paragraph (1)--
                    ``(A) with respect to any transfer if--
                            ``(i) the transferee is an eligible entity 
                        which provides such person, at the time of 
                        transfer, a qualifying letter of intent,
                            ``(ii) the transferee is not an eligible 
                        entity, it is established to the satisfaction 
                        of the Secretary, that the transfer of 
                        ownership or possession, as the case may be, 
                        will be consistent with section 170(h)(5), and 
                        the transferee provides such person, at the 
                        time of transfer, a qualifying letter of 
                        intent, or
                            ``(iii) tax has previously been paid under 
                        this subsection as a result of a prior transfer 
                        of ownership or possession of the same 
                        property, or
                    ``(B) with respect to any removal of a conservation 
                restriction contained in an instrument of conveyance, 
                if it is established to the satisfaction of the 
                Secretary that the retention of the restriction was 
                impracticable or impossible and the proceeds continue 
                to be used in a manner consistent with 1 or more of the 
                conservation purposes specified in clause (i), (ii), or 
                (iii) of section 170(h)(4)(A).
            ``(5) Administrative provisions.--For purposes of subtitle 
        F, the taxes imposed by this subsection shall be treated as 
        excise taxes with respect to which the deficiency procedures of 
        such subtitle apply.
            ``(6) Reporting.--The Secretary may require such reporting 
        as may be necessary or appropriate to further the purpose under 
        this section that any conservation use be in perpetuity.''.
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 is amended by inserting after the item 
relating to section 121 the following new item:

                              ``Sec. 121A. 25-percent exclusion of gain 
                                        on sales or exchanges of land 
                                        or water interests to eligible 
                                        entities for conservation 
                                        purposes.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to sales or exchanges occurring after December 31, 2003.

SEC. 108. TAX EXCLUSION FOR COST-SHARING PAYMENTS UNDER PARTNERS FOR 
              FISH AND WILDLIFE PROGRAM.

    (a) In General.--Section 126(a) (relating to certain cost-sharing 
payments) is amended by redesignating paragraph (10) as paragraph (11) 
and by inserting after paragraph (9) the following:
            ``(10) The Partners for Fish and Wildlife Program 
        authorized by the Fish and Wildlife Act of 1956 (16 U.S.C. 742a 
        et seq.).''
    (b) Effective Date.--The amendments made by this section shall 
apply to payments received after the date of the enactment of this Act.

SEC. 109. ADJUSTMENT TO BASIS OF S CORPORATION STOCK FOR CERTAIN 
              CHARITABLE CONTRIBUTIONS.

    (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.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made after the date of the enactment of this Act.

SEC. 110. ENHANCED DEDUCTION FOR CHARITABLE CONTRIBUTION OF LITERARY, 
              MUSICAL, ARTISTIC, AND SCHOLARLY COMPOSITIONS.

    (a) In General.--Subsection (e) of section 170 (relating to certain 
contributions of ordinary income and capital gain property), as amended 
by this Act, is amended by adding at the end the following new 
paragraph:
            ``(8) Special rule for certain contributions of literary, 
        musical, artistic, or scholarly compositions.--
                    ``(A) In general.--In the case of a qualified 
                artistic charitable contribution--
                            ``(i) the amount of such contribution taken 
                        into account under this section shall be the 
                        fair market value of the property contributed 
                        (determined at the time of such contribution), 
                        and
                            ``(ii) no reduction in the amount of such 
                        contribution shall be made under paragraph (1).
                    ``(B) Qualified artistic charitable contribution.--
                For purposes of this paragraph, the term `qualified 
                artistic charitable contribution' means a charitable 
                contribution of any literary, musical, artistic, or 
                scholarly composition, or similar property, or the 
                copyright thereon (or both), but only if--
                            ``(i) such property was created by the 
                        personal efforts of the taxpayer making such 
                        contribution no less than 18 months prior to 
                        such contribution,
                            ``(ii) the taxpayer--
                                    ``(I) has received a qualified 
                                appraisal of the fair market value of 
                                such property in accordance with the 
                                regulations under this section, and
                                    ``(II) attaches to the taxpayer's 
                                income tax return for the taxable year 
                                in which such contribution was made a 
                                copy of such appraisal,
                            ``(iii) the donee is an organization 
                        described in subsection (b)(1)(A),
                            ``(iv) the use of such property by the 
                        donee is related to the purpose or function 
                        constituting the basis for the donee's 
                        exemption under section 501 (or, in the case of 
                        a governmental unit, to any purpose or function 
                        described under section 501(c)),
                            ``(v) the taxpayer receives from the donee 
                        a written statement representing that the 
                        donee's use of the property will be in 
                        accordance with the provisions of clause (iv), 
                        and
                            ``(vi) the written appraisal referred to in 
                        clause (ii) includes evidence of the extent (if 
                        any) to which property created by the personal 
                        efforts of the taxpayer and of the same type as 
the donated property is or has been--
                                    ``(I) owned, maintained, and 
                                displayed by organizations described in 
                                subsection (b)(1)(A), and
                                    ``(II) sold to or exchanged by 
                                persons other than the taxpayer, donee, 
                                or any related person (as defined in 
                                section 465(b)(3)(C)).
                    ``(C) Maximum dollar limitation; no carryover of 
                increased deduction.--The increase in the deduction 
                under this section by reason of this paragraph for any 
                taxable year--
                            ``(i) shall not exceed the artistic 
                        adjusted gross income of the taxpayer for such 
                        taxable year, and
                            ``(ii) shall not be taken into account in 
                        determining the amount which may be carried 
                        from such taxable year under subsection (d).
                    ``(D) Artistic adjusted gross income.--For purposes 
                of this paragraph, the term `artistic adjusted gross 
                income' means that portion of the adjusted gross income 
                of the taxpayer for the taxable year attributable to--
                            ``(i) income from the sale or use of 
                        property created by the personal efforts of the 
                        taxpayer which is of the same type as the 
                        donated property, and
                            ``(ii) income from teaching, lecturing, 
                        performing, or similar activity with respect to 
                        property described in clause (i).
                    ``(E) Paragraph not to apply to certain 
                contributions.--Subparagraph (A) shall not apply to any 
                charitable contribution of any letter, memorandum, or 
                similar property which was written, prepared, or 
                produced by or for an individual while the individual 
                is an officer or employee of any person (including any 
                government agency or instrumentality) unless such 
                letter, memorandum, or similar property is entirely 
                personal.
                    ``(F) Copyright treated as separate property for 
                partial interest rule.--In the case of a qualified 
                artistic charitable contribution, the tangible 
                literary, musical, artistic, or scholarly composition, 
                or similar property and the copyright on such work 
                shall be treated as separate properties for purposes of 
                this paragraph and subsection (f)(3).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made after the date of the enactment of this Act.

SEC. 111. MILEAGE REIMBURSEMENTS TO CHARITABLE VOLUNTEERS EXCLUDED FROM 
              GROSS INCOME.

    (a) In General.--Part III of subchapter B of chapter 1 is amended 
by inserting after section 139 the following new section:

``SEC. 139A. MILEAGE REIMBURSEMENTS TO CHARITABLE VOLUNTEERS.

    ``(a) In General.--Gross income of an individual does not include 
amounts received, from an organization described in section 170(c), as 
reimbursement of operating expenses with respect to use of a passenger 
automobile for the benefit of such organization. The preceding sentence 
shall apply only to the extent that such reimbursement would be 
deductible under this chapter if section 274(d) were applied--
            ``(1) by using the standard business mileage rate 
        established under such section, and
            ``(2) as if the individual were an employee of an 
        organization not described in section 170(c).
    ``(b) Application to Volunteer Services Only.--Subsection (a) shall 
not apply with respect to any expenses relating to the performance of 
services for compensation.
    ``(c) No Double Benefit.--A taxpayer may not claim a deduction or 
credit under any other provision of this title with respect to the 
expenses under subsection (a).
    ``(d) Exemption From Reporting Requirements.--Section 6041 shall 
not apply with respect to reimbursements excluded from income under 
subsection (a).''
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 is amended by inserting after the item 
relating to section 139 and inserting the following new item:

                              ``Sec. 139A. Mileage reimbursements to 
                                        charitable volunteers.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

        TITLE II--IMPROVE OVERSIGHT OF TAX-EXEMPT ORGANIZATIONS

SEC. 201. DISCLOSURE OF WRITTEN DETERMINATIONS.

    (a) In General.--Section 6110(l) (relating to section not to apply) 
is amended by striking all matter before subparagraph (A) of paragraph 
(2) and inserting the following:
    ``(l) Section Not To Apply.--
            ``(1) In general.--This section shall not apply to any 
        matter to which section 6104 or 6105 applies, except that this 
        section shall apply to any written determination and related 
        background file document relating to an organization described 
        under subsection (c) or (d) of section 501 (including any 
        written determination denying an organization tax-exempt status 
        under such subsection) or a political organization described in 
        section 527 which is not required to be disclosed by section 
        6104(a)(1)(A).
            ``(2) Additional matters.--This section shall not apply to 
        any--''.
    (b) Effective Date.--The amendment made by this section shall apply 
to written determinations issued after the date of the enactment of 
this Act.

SEC. 202. DISCLOSURE OF INTERNET WEB SITE AND NAME UNDER WHICH 
              ORGANIZATION DOES BUSINESS.

    (a) 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) Disclosure of Name Under Which Organization Does Business and 
Its Internet Web Site.--Any organization which is subject to the 
requirements of subsection (a) shall include on the return required 
under subsection (a)--
            ``(1) any name under which such organization operates or 
        does business, and
            ``(2) the Internet web site address (if any) of such 
        organization.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to returns filed after December 31, 2003.

SEC. 203. MODIFICATION TO REPORTING CAPITAL TRANSACTIONS.

    (a) Requirement of Summary Report.--Section 6033(c) (relating to 
additional provisions relating to private foundations) is amended by 
adding at the end the following new sentence: ``Any information 
included in an annual return regarding the gain or loss from the sale 
or other disposition of property which is required to be furnished in 
order to calculate the tax on net investment income shall also be 
reported in summary form with a notice that detailed information is 
available upon request by the public.''.
    (b) Disclosure Requirement.--Section 6104(b) (relating to 
inspection of annual information returns), as amended by this Act, is 
amended by adding at the end the following new sentences: ``With 
respect to any private foundation (as defined in section 509(a)), any 
information regarding the gain or loss from the sale or other 
disposition of property which is required to be furnished in order to 
calculate the tax on net investment income but which is not in summary 
form is not required to be made available to the public under this 
subsection except upon the explicit request by a member of the public 
to the Secretary.''.
    (c) Public Inspection Requirement.--Section 6104(d) (relating to 
public inspection of certain annual returns, applications for 
exemptions, and notices of status) is amended by adding at the end the 
following new paragraph:
            ``(9) Application to private foundation capital transaction 
        information.--With respect to any private foundation (as 
        defined in section 509(a)), any information regarding the gain 
        or loss from the sale or other disposition of property which is 
        required to be furnished in order to calculate the tax on net 
        investment income but which is not in summary form is not 
        required to be made available to the public under this 
        subsection except upon the explicit request by a member of the 
        public to the private foundation in the form and manner of a 
        request described in paragraph (1)(B).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to returns filed after December 31, 2003.

SEC. 204. DISCLOSURE THAT FORM 990 IS PUBLICLY AVAILABLE.

    (a) In General.--The Commissioner of the Internal Revenue shall 
notify the public in appropriate publications or other materials of the 
extent to which an exempt organization's Form 990, Form 990-EZ, or Form 
990-PF is publicly available.
    (b) Effective Date.--The amendments made by this section shall 
apply to publications or other materials issued or revised after the 
date of the enactment of this Act.

SEC. 205. DISCLOSURE TO STATE OFFICIALS OF PROPOSED ACTIONS RELATED TO 
              SECTION 501(C) ORGANIZATIONS.

    (a) In General.--Subsection (c) of section 6104 is amended by 
striking paragraph (2) and inserting the following new paragraphs:
            ``(2) Disclosure of proposed actions related to charitable 
        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
                            ``(iii) the names, addresses, and taxpayer 
                        identification 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 
                information 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 regulating such organizations.
                Such information may only be inspected by or disclosed 
                to representatives of the appropriate State officer 
                designated as the individuals who are to inspect or to 
                receive the returns or return information under this 
                paragraph on behalf of such officer. Such 
                representatives shall not include any contractor or 
                agent.
                    ``(D) Disclosures other than by request.--The 
                Secretary may make available for inspection or disclose 
                returns and return information of an organization to 
                which paragraph (1) applies to an appropriate State 
                officer of any State if the Secretary determines that 
                such inspection or disclosure may facilitate the 
                resolution of Federal or State issues relating to the 
                tax-exempt status of such organization.
            ``(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 an organization 
        described in paragraph (2), (4), (6), (7), (8), (10), or (13) 
        of section 501(c) for the purpose of, and 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 information may 
        be inspected only by or disclosed only to representatives of 
        the appropriate State officer designated as the individuals who 
        are to inspect or to receive the returns or return information 
        under this paragraph on behalf of such officer. Such 
        representatives shall not include any contractor or agent.
            ``(4) Use in civil judicial and administrative 
        proceedings.--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 
        proceedings 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 seriously impair 
Federal tax administration.
            ``(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 
                `appropriate State officer' means--
                            ``(i) the State attorney general,
                            ``(ii) in the case of an organization to 
                        which paragraph (1) applies, any other State 
                        official charged with overseeing organizations 
                        of the type described in section 501(c)(3), and
                            ``(iii) in the case of an organization to 
                        which paragraph (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) Subsection (a) of section 6103 is amended--
                    (A) by inserting ``or any appropriate State officer 
                who has or had access to returns or return information 
                under section 6104(c)'' after ``this section'' in 
                paragraph (2), and
                    (B) by striking ``or subsection (n)'' in paragraph 
                (3) and inserting ``subsection (n), or section 
                6104(c)''.
            (2) Subparagraph (A) of section 6103(p)(3) is amended by 
        inserting ``and section 6104(c)'' after ``section'' in the 
        first sentence.
            (3) Paragraph (4) of section 6103(p) is amended--
                    (A) in the matter preceding subparagraph (A), by 
                striking ``(16) or any other person described in 
                subsection (l)(16)'' and inserting ``(16), any other 
                person described in subsection (l)(16), or any 
                appropriate State officer (as defined in section 
                6104(c))'', and
                    (B) in subparagraph (F), by striking ``or any other 
                person described in subsection (l)(16)'' and inserting 
                ``any other person described in subsection (l)(16), or 
                any appropriate State officer (as defined in section 
                6104(c))''.
            (4) The heading for paragraph (1) of section 6104(c) is 
        amended by inserting ``for charitable organizations''.
            (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 6104(c)'' after ``6103''.
            (7) Paragraph (2) of section 7431(a) is amended by 
        inserting ``(including any disclosure 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. 206. EXPANSION OF PENALTIES TO PREPARERS OF FORM 990.

    (a) In General.--Section 6695 (relating to other assessable 
penalties with respect to the preparation of income tax returns for 
other persons) is amended by adding at the end the following new 
subsections:
    ``(h) Certain Omissions and Misrepresentations.--
            ``(1) In general.--Any person who prepares for compensation 
        any return under section 6033 who omits or misrepresents any 
        information with respect to such return which was known or 
        should have been known by such person shall pay a penalty of 
        $250 with respect to such return.
            ``(2) Exception for minor, inadvertent omissions.--
        Paragraph (1) shall not apply to minor, inadvertent omissions.
            ``(3) Rules for determining return preparer.--For purposes 
        of this subsection and subsection (i), any reference to a 
        person who prepares for compensation a return under section 
        6033--
                    ``(A) shall include any person who employs 1 or 
                more persons to prepare for compensation a return under 
                section 6033, and
                    ``(B) shall not include any person who would be 
                described in clause (i), (ii), (iii), or (iv) of 
                section 7701(a)(36)(B) if such section referred to a 
                return under section 6033.
    ``(i) Willful or Reckless Conduct.--
            ``(1) In general.--Any person who prepares for compensation 
        any return under section 6033 who recklessly or intentionally 
        misrepresents any information or recklessly or intentionally 
        disregards any rule or regulation with respect to such return 
        shall pay a penalty of $1,000 with respect to such return.
            ``(2) Coordination with other penalties.--With respect to 
        any return, the amount of the penalty payable by any person by 
        reason of paragraph (1) shall be reduced by the amount of the 
        penalty paid by such person by reason of subsection (h) or 
        section 6694.''.
    (b) Conforming Amendments.--
            (1) The heading for section 6695 is amended by inserting 
        ``and other'' after ``income tax''.
            (2) The item relating to section 6695 in the table of 
        sections for part I of subchapter B of chapter 68 is amended by 
        inserting ``and other'' after ``income tax''.
    (c) Effective Date.--The amendment made by this section shall apply 
with respect to documents prepared after the date of the enactment of 
this Act.

SEC. 207. NOTIFICATION REQUIREMENT FOR ENTITIES NOT CURRENTLY REQUIRED 
              TO FILE.

    (a) In General.--Section 6033 (relating to returns by exempt 
organizations), as amended by section 202(a), is amended by 
redesignating subsection (i) as subsection (j) and by inserting after 
subsection (h) the following new subsection:
    ``(i) Additional Notification Requirements.--
            ``(1) In general.--Any organization the gross receipts of 
        which in any taxable year result in such organization being 
        referred to in subsection (a)(2)(A)(ii) or (a)(2)(B)--
                    ``(A) shall furnish annually information, at such 
                time and in such manner as the Secretary may by forms 
                or regulations prescribe, setting forth--
                            ``(i) the legal name of the organization,
                            ``(ii) any name under which such 
                        organization operates or does business,
                            ``(iii) the organization's mailing address 
                        and Internet web site address (if any),
                            ``(iv) the organization's taxpayer 
                        identification number,
                            ``(v) the name and address of a principal 
                        officer, and
                            ``(vi) evidence of the continuing basis for 
                        the organization's exemption from the filing 
                        requirements under subsection (a)(1), and
                    ``(B) upon the termination of the existence of the 
                organization, shall furnish notice of such termination.
            ``(2) Penalty for Failure To Notify.--
                    ``(A) In general.--If an organization described in 
                paragraph (1) fails to file 3 consecutive annual 
                notices required under such paragraph, 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 notice. The Secretary shall publish 
                and maintain a list of organizations the status of 
                which is so revoked.
                    ``(B) Retroactive reinstatement if reasonable cause 
                shown for failure.--If upon reapplication for status as 
                an organization exempt from tax under section 501(a), 
                an organization described in subparagraph (A) can show 
                to the satisfaction of the Secretary evidence of 
                reasonable cause for the failure described in such 
                subparagraph, the organization's status shall be 
                effective from the date of the revocation under such 
                subparagraph.''.
    (b) No Declaratory Judgment Relief.--Section 7428(b) (relating to 
limitations) is amended by adding at the end the following 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(i)(2)(A).''.
    (c) No Inspection Requirement.--Section 6104(b) (relating to 
inspection of annual information returns) is amended by inserting 
``(other than subsection (i) thereof)'' after ``6033''.
    (d) No Disclosure Requirement.--Section 6104(d)(3) (relating to 
exceptions from disclosure requirements) is amended by redesignating 
subparagraph (B) as subparagraph (C) and by inserting after 
subparagraph (A) the following new subparagraph:
                    ``(B) Nondisclosure of annual notices.--Paragraph 
                (1) shall not require the disclosure of any notice 
                required under section 6033(i)(1).''.
    (e) 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)(1).''.
    (f) Notice of Requirement by Secretary.--The Secretary of the 
Treasury shall notify in a timely manner every organization described 
in section 6033(i)(1) of the Internal Revenue Code of 1986 (as added by 
this section) of the requirement under such section 6033(i)(1)--
            (1) 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
            (2) by Internet or other means of outreach, in the case of 
        any other organization.
    (g) Effective Date.--The amendments made by this section shall 
apply to notices with respect to annual periods beginning after 2003.

SEC. 208. SUSPENSION OF TAX-EXEMPT STATUS OF TERRORIST ORGANIZATIONS.

    (a) In General.--Section 501 of the Internal Revenue Code of 1986 
(relating to exemption from tax on corporations, certain trusts, etc.) 
is amended by redesignating subsection (p) as subsection (q) and by 
inserting after subsection (o) the following new subsection:
    ``(p) Suspension of Tax-Exempt Status of Terrorist Organizations.--
            ``(1) In general.--The exemption from tax under subsection 
        (a) with respect to any organization described in paragraph 
        (2), and the eligibility of any organization described in 
        paragraph (2) to apply for recognition of exemption under 
        subsection (a), shall be suspended during the period described 
        in paragraph (3).
            ``(2) Terrorist organizations.--An organization is 
        described in this paragraph if such organization is designated 
        or otherwise individually identified--
                    ``(A) under section 212(a)(3)(B)(vi)(II) or 219 of 
                the Immigration and Nationality Act as a terrorist 
                organization or foreign terrorist organization,
                    ``(B) in or pursuant to an Executive order which is 
                related to terrorism and issued under the authority of 
                the International Emergency Economic Powers Act or 
                section 5 of the United Nations Participation Act of 
                1945 for the purpose of imposing on such organization 
                an economic or other sanction, or
                    ``(C) in or pursuant to an Executive order issued 
                under the authority of any Federal law if--
                            ``(i) the organization is designated or 
                        otherwise individually identified in or 
                        pursuant to such Executive order as supporting 
                        or engaging in terrorist activity (as defined 
                        in section 212(a)(3)(B) of the Immigration and 
                        Nationality Act) or supporting terrorism (as 
                        defined in section 140(d)(2) of the Foreign 
                        Relations Authorization Act, Fiscal Years 1988 
                        and 1989); and
                            ``(ii) such Executive order refers to this 
                        subsection.
            ``(3) Period of suspension.--With respect to any 
        organization described in paragraph (2), the period of 
        suspension--
                    ``(A) begins on the date of the first publication 
                of a designation or identification described in 
                paragraph (2) with respect to such organization, and
                    ``(B) ends on the first date that all designations 
                and identifications described in paragraph (2) with 
                respect to such organization are rescinded pursuant to 
                the law or Executive order under which such designation 
                or identification was made.
            ``(4) Denial of deduction.--No deduction shall be allowed 
        under section 170, 545(b)(2), 556(b)(2), 642(c), 2055, 
        2106(a)(2), or 2522 for any contribution to an organization 
        described in paragraph (2) during the period described in 
        paragraph (3).
            ``(5) Denial of administrative or judicial challenge of 
        suspension or denial of deduction.--Notwithstanding section 
        7428 or any other provision of law, no organization or other 
        person may challenge a suspension under paragraph (1), a 
        designation or identification described in paragraph (2), the 
        period of suspension described in paragraph (3), or a denial of 
        a deduction under paragraph (4) in any administrative or 
        judicial proceeding relating to the Federal tax liability of 
        such organization or other person.
            ``(6) Erroneous designation.--
                    ``(A) In general.--If--
                            ``(i) the tax exemption of any organization 
                        described in paragraph (2) is suspended under 
                        paragraph (1),
                            ``(ii) each designation and identification 
                        described in paragraph (2) which has been made 
                        with respect to such organization is determined 
                        to be erroneous pursuant to the law or 
                        Executive order under which such designation or 
                        identification was made, and
                            ``(iii) the erroneous designations and 
                        identifications result in an overpayment of 
                        income tax for any taxable year by such 
                        organization,
                credit or refund (with interest) with respect to such 
                overpayment shall be made.
                    ``(B) Waiver of limitations.--If the credit or 
                refund of any overpayment of tax described in 
                subparagraph (A)(iii) is prevented at any time by the 
                operation of any law or rule of law (including res 
                judicata), such credit or refund may nevertheless be 
                allowed or made if the claim therefor is filed before 
                the close of the 1-year period beginning on the date of 
                the last determination described in subparagraph 
                (A)(ii).
            ``(7) Notice of Suspensions.--If the tax exemption of any 
        organization is suspended under this subsection, the Internal 
        Revenue Service shall update the listings of tax-exempt 
        organizations and shall publish appropriate notice to taxpayers 
        of such suspension and of the fact that contributions to such 
        organization are not deductible during the period of such 
        suspension.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

     TITLE III--OTHER CHARITABLE AND EXEMPT ORGANIZATION PROVISIONS

SEC. 301. MODIFICATION OF EXCISE TAX ON UNRELATED BUSINESS TAXABLE 
              INCOME OF CHARITABLE REMAINDER TRUSTS.

    (a) In General.--Subsection (c) of section 664 (relating to 
exemption from income taxes) is amended to read as follows:
    ``(c) Taxation of Trusts.--
            ``(1) Income tax.--A charitable remainder annuity trust and 
        a charitable remainder unitrust shall, for any taxable year, 
        not be subject to any tax imposed by this subtitle.
            ``(2) Excise tax.--
                    ``(A) In general.--In the case of a charitable 
                remainder annuity trust or a charitable remainder 
                unitrust which has unrelated business taxable income 
                (within the meaning of section 512, determined as if 
                part III of subchapter F applied to such trust) for a 
                taxable year, there is hereby imposed on such trust or 
                unitrust an excise tax equal to the amount of such 
                unrelated business taxable income.
                    ``(B) Certain rules to apply.--The tax imposed by 
                subparagraph (A) shall be treated as imposed by chapter 
                42 for purposes of this title other than subchapter E 
                of chapter 42.
                    ``(C) Tax court proceedings.--For purposes of this 
                paragraph, the references in section 6212(c)(1) to 
                section 4940 shall be deemed to include references to 
                this paragraph.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2002.

SEC. 302. MODIFICATIONS TO SECTION 512(B)(13).

    (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 excess payments.--
                            ``(i) In general.--Subparagraph (A) shall 
                        apply only to the portion of a 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 prescribed 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.''.
    (b) Effective Date.--
            (1) In general.--The amendment made by this section shall 
        apply to payments received or accrued after December 31, 2000.
            (2) Payments subject to binding contract transition rule.--
        If the amendments made by section 1041 of the Taxpayer Relief 
        Act of 1997 did not apply to any amount received or accrued in 
        the first 2 taxable years beginning on or after the date of the 
        enactment of the Taxpayer Relief Act of 1997 under any contract 
        described in subsection (b)(2) of such section, such amendments 
        also shall not apply to amounts received or accrued under such 
        contract before January 1, 2001.

SEC. 303. SIMPLIFICATION OF LOBBYING EXPENDITURE LIMITATION.

    (a) Repeal of Grassroots Expenditure Limit.--Paragraph (1) of 
section 501(h) (relating to expenditures by public charities to 
influence legislation) is amended to read as follows:
            ``(1) General rule.--In the case of an organization to 
        which this subsection applies, exemption from taxation under 
        subsection (a) shall be denied because a substantial part of 
        the activities of such organization consists of carrying on 
        propaganda, or otherwise attempting, to influence legislation, 
        but only if such organization normally makes lobbying 
        expenditures in excess of the lobbying ceiling amount for such 
        organization for each taxable year.''.
    (b) Excess Lobbying Expenditures.--Section 4911(b) is amended to 
read as follows:
    ``(b) Excess Lobbying Expenditures.--For purposes of this section, 
the term `excess lobbying expenditures' means, for a taxable year, the 
amount by which the lobbying expenditures made by the organization 
during the taxable year exceed the lobbying nontaxable amount for such 
organization for such taxable year.''.
    (c) Conforming Amendments.--
            (1) Section 501(h)(2) is amended by striking subparagraphs 
        (C) and (D).
            (2) Section 4911(c) is amended by striking paragraphs (3) 
        and (4).
            (3) Paragraph (1)(A) of section 4911(f) is amended by 
        striking ``limits of section 501(h)(1) have'' and inserting 
        ``limit of section 501(h)(1) has''.
            (4) Paragraph (1)(C) of section 4911(f) is amended by 
        striking ``limits of section 501(h)(1) are'' and inserting 
        ``limit of section 501(h)(1) is''.
            (5) Paragraphs (4)(A) and (4)(B) of section 4911(f) are 
        each amended by striking ``limits of section 501(h)(1)'' and 
        inserting ``limit of section 501(h)(1)''.
            (6) Paragraph (8) of section 6033(b) (relating to certain 
        organizations described in section 501(c)(3)) is amended by 
        inserting ``and'' at the end of subparagraph (A) and by 
        striking subparagraphs (C) and (D).
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.

SEC. 304. EXPEDITED REVIEW PROCESS FOR CERTAIN TAX-EXEMPTION 
              APPLICATIONS.

    (a) In General.--The Secretary of the Treasury or the Secretary's 
delegate (in this section, referred to as the ``Secretary'') shall 
adopt procedures to expedite the consideration of applications for 
exempt status under section 501(c)(3) of the Internal Revenue Code of 
1986 filed after December 31, 2003, by any organization that--
            (1) is organized and operated for the primary purpose of 
        providing social services;
            (2) is seeking a contract or grant under a Federal, State, 
        or local program that provides funding for social services 
        programs;
            (3) establishes that, under the terms and conditions of the 
        contract or grant program, an organization is required to 
        obtain such exempt status before the organization is eligible 
        to apply for a contract or grant;
            (4) includes with its exemption application a copy of its 
        completed Federal, State, or local contract or grant 
        application; and
            (5) meets such other criteria as the Secretary deems 
        appropriate for expedited consideration.
The Secretary may prescribe other similar circumstances in which such 
organizations may be entitled to expedited consideration.
    (b) Waiver of Application Fee for Exempt Status.--Any organization 
that meets the conditions described in subsection (a) (without regard 
to paragraph (3) of that subsection) is entitled to a waiver of any fee 
for an application for exempt status under section 501(c)(3) of the 
Internal Revenue Code of 1986 if the organization certifies that the 
organization has had (or expects to have) average annual gross receipts 
of not more than $50,000 during the preceding 4 years (or, in the case 
of an organization not in existence throughout the preceding 4 years, 
during such organization's first 4 years).
    (c) Social Services Defined.--For purposes of this section--
            (1) In general.--The term ``social services'' means 
        services directed at helping people in need, reducing poverty, 
        improving outcomes of low-income children, revitalizing low-
        income communities, and empowering low-income families and low-
        income individuals to become self-sufficient, including--
                    (A) child care services, protective services for 
                children and adults, services for children and adults 
                in foster care, adoption services, services related to 
                the management and maintenance of the home, day care 
                services for adults, and services to meet the special 
                needs of children, older individuals, and individuals 
                with disabilities (including physical, mental, or 
                emotional disabilities);
                    (B) transportation services;
                    (C) job training and related services, and 
                employment services;
                    (D) information, referral, and counseling services;
                    (E) the preparation and delivery of meals, and 
                services related to soup kitchens or food banks;
                    (F) health support services;
                    (G) literacy and mentoring programs;
                    (H) services for the prevention and treatment of 
                juvenile delinquency and substance abuse, services for 
                the prevention of crime and the provision of assistance 
                to the victims and the families of criminal offenders, 
                and services related to the intervention in, and 
                prevention of, domestic violence; and
                    (I) services related to the provision of assistance 
                for housing under Federal law.
            (2) Exclusions.--The term does not include a program having 
        the purpose of delivering educational assistance under the 
        Elementary and Secondary Education Act of 1965 (20 U.S.C. 6301 
        et seq.) or under the Higher Education Act of 1965 (20 U.S.C. 
        1001 et seq.).

SEC. 305. CLARIFICATION OF DEFINITION OF CHURCH TAX INQUIRY.

    Subsection (i) of section 7611 (relating to section not to apply to 
criminal investigations, etc.) is amended by striking ``or'' at the end 
of paragraph (4), by striking the period at the end of paragraph (5) 
and inserting ``, or'', and by inserting after paragraph (5) the 
following:
            ``(6) information provided by the Secretary related to the 
        standards for exemption from tax under this title and the 
        requirements under this title relating to unrelated business 
        taxable income.''.

SEC. 306. EXPANSION OF DECLARATORY JUDGMENT REMEDY TO TAX-EXEMPT 
              ORGANIZATIONS.

    (a) In General.--Paragraph (1) of section 7428(a) (relating to 
creation of remedy) is amended--
            (1) in subparagraph (B) by inserting after ``509(a))'' the 
        following: ``or as a private operating foundation (as defined 
        in section 4942(j)(3))''; and
            (2) by amending subparagraph (C) to read as follows:
                    ``(C) with respect to the initial qualification or 
                continuing qualification of an organization as an 
                organization described in section 501(c) (other than 
                paragraph (3)) or 501(d) which is exempt from tax under 
                section 501(a), or''.
    (b) Court Jurisdiction.--Subsection (a) of section 7428 is amended 
in the material following paragraph (2) by striking ``United States Tax 
Court, the United States Claims Court, or the district court of the 
United States for the District of Columbia'' and inserting the 
following: ``United States Tax Court (in the case of any such 
determination or failure) or the United States Claims Court or the 
district court of the United States for the District of Columbia (in 
the case of a determination or failure with respect to an issue 
referred to in subparagraph (A) or (B) of paragraph (1)),''.
    (c) Effective Date.--The amendments made by this section shall 
apply to pleadings filed with respect to determinations (or requests 
for determinations) made after December 31, 2002.

SEC. 307. DEFINITION OF CONVENTION OR ASSOCIATION OF CHURCHES.

    Section 7701 (relating to definitions) is amended by redesignating 
subsection (n) as subsection (o) and by inserting after subsection (m) 
the following new subsection:
    ``(n) 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. 308. PAYMENTS BY CHARITABLE ORGANIZATIONS TO VICTIMS OF WAR ON 
              TERRORISM.

    (a) In General.--For purposes of the Internal Revenue Code of 
1986--
            (1) payments made by an organization described in section 
        501(c)(3) of such Code to a member of the Armed Forces of the 
        United States, or to an individual of such member's immediate 
        family by reason of the death, injury, wounding, or illness of 
        such member incurred as the result of the military response of 
        the United States to the terrorist attacks against the United 
        States on September 11, 2001, shall be treated as related to 
        the purpose or function constituting the basis for such 
        organization's exemption under section 501 of such Code if such 
        payments are made using an objective formula which is 
        consistently applied, and
            (2) in the case of a private foundation (as defined in 
        section 509 of such Code), any payment described in paragraph 
        (1) shall not be treated as made to a disqualified person for 
        purposes of section 4941 of such Code.
    (b) Effective Date.--This section shall apply to payments made 
after the date of the enactment of this Act and before September 11, 
2004.

SEC. 309. MODIFICATION OF SCHOLARSHIP FOUNDATION RULES.

    In applying the limitations on the percentage of scholarship grants 
which may be awarded after the date of the enactment of this Act, to 
children of current or former employees under Revenue Procedure 76-47, 
such percentage shall be increased to 35 percent of the eligible 
applicants to be considered by the selection committee and to 20 
percent of individuals eligible for the grants, but only if the 
foundation awarding the grants demonstrates that, in addition to 
meeting the other requirements of Revenue Procedure 76-47, it provides 
a comparable number and aggregate amount of grants during the same 
program year to individuals who are not such employees, children or 
dependents of such employees, or affiliated with the employer of such 
employees.

SEC. 310. TREATMENT OF CERTAIN HOSPITAL SUPPORT ORGANIZATIONS AS 
              QUALIFIED ORGANIZATIONS FOR PURPOSES OF DETERMINING 
              ACQUISITION INDEBTEDNESS.

    (a) In General.--Subparagraph (C) of section 514(c)(9) (relating to 
real property acquired by a qualified organization) is amended by 
striking ``or'' at the end of clause (ii), by striking the period at 
the end of clause (iii) and inserting ``; or'', and by adding at the 
end the following new clause:
                                    ``(iv) a qualified hospital support 
                                organization (as defined in 
                                subparagraph (I)).''.
    (b) Qualified Hospital Support Organizations.--Paragraph (9) of 
section 514(c) is amended by adding at the end the following new 
subparagraph:
                    ``(I) Qualified hospital support organizations.--
                For purposes of subparagraph (C)(iv), the term 
                `qualified hospital support organization' means, with 
                respect to any eligible indebtedness (including any 
                qualified refinancing of such eligible indebtedness), a 
                support organization (as defined in section 509(a)(3)) 
                which supports a hospital described in section 
                119(d)(4)(B) and with respect to which--
                                    ``(i) more than half of the 
                                organization's assets (by value) at any 
                                time since its organization--
                                            ``(I) were acquired, 
                                        directly or indirectly, by 
                                        testamentary gift or devise, 
                                        and
                                            ``(II) consisted of real 
                                        property, and
                                    ``(ii) the fair market value of the 
                                organization's real estate acquired, 
                                directly or indirectly, by gift or 
                                devise, exceeded 25 percent of the fair 
                                market value of all investment assets 
                                held by the organization immediately 
                                prior to the time that the eligible 
                                indebtedness was incurred.
                For purposes of this subparagraph, the term `eligible 
                indebtedness' means indebtedness secured by real 
                property acquired by the organization, directly or 
                indirectly, by gift or devise, the proceeds of which 
                are used exclusively to acquire any leasehold interest 
                in such real property or for improvements on, or 
                repairs to, such real property. A determination under 
                clauses (i) and (ii) of this subparagraph shall be made 
                each time such an eligible indebtedness (or the 
                qualified refinancing of such an eligible indebtedness) 
                is incurred. For purposes of this subparagraph, a 
                refinancing of such an eligible indebtedness shall be 
                considered qualified if such refinancing does not 
                exceed the amount of the refinanced eligible 
                indebtedness immediately before the refinancing.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to indebtedness incurred after December 31, 2003.

                 TITLE IV--SOCIAL SERVICES BLOCK GRANT

SEC. 401. RESTORATION OF FUNDS FOR THE SOCIAL SERVICES BLOCK GRANT.

    (a) Findings.--Congress makes the following findings:
            (1) On August 22, 1996, the Personal Responsibility and 
        Work Opportunity Reconciliation Act of 1996 (Public Law 104-
        193; 110 Stat. 2105) was signed into law.
            (2) In enacting that law, Congress authorized 
        $2,800,000,000 for fiscal year 2003 and each fiscal year 
        thereafter to carry out the Social Services Block Grant program 
        established under title XX of the Social Security Act (42 
        U.S.C. 1397 et seq.).
    (b) Restoration of Funds.--Section 2003(c)(11) of the Social 
Security Act (42 U.S.C. 1397b(c)(11)) is amended by inserting ``, 
except that, with respect to fiscal year 2003, the amount shall be 
$1,975,000,000, and with respect to fiscal year 2004, the amount shall 
be $2,800,000,000'' after ``thereafter.''.

SEC. 402. RESTORATION OF AUTHORITY TO TRANSFER UP TO 10 PERCENT OF TANF 
              FUNDS TO THE SOCIAL SERVICES BLOCK GRANT.

    (a) In General.--Section 404(d)(2) of the Social Security Act (42 
U.S.C. 604(d)(2)) is amended to read as follows:
            ``(2) Limitation on amount transferable to title xx 
        programs.--A State may use not more than 10 percent of the 
        amount of any grant made to the State under section 403(a) for 
        a fiscal year to carry out State programs pursuant to title 
        XX.''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to amounts made available for fiscal year 2003 and each fiscal year 
thereafter.

SEC. 403. REQUIREMENT TO SUBMIT ANNUAL REPORT ON STATE ACTIVITIES.

    (a) In General.--Section 2006(c) of the Social Security Act (42 
U.S.C. 1397e(c)) is amended by adding at the end the following: ``The 
Secretary shall compile the information submitted by the States and 
submit that information to Congress on an annual basis.''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to information submitted by States under section 2006 of the Social 
Security Act (42 U.S.C. 1397e) with respect to fiscal year 2002 and 
each fiscal year thereafter.

                TITLE V--INDIVIDUAL DEVELOPMENT ACCOUNTS

SEC. 501. SHORT TITLE.

    This title may be cited as the ``Savings for Working Families Act 
of 2003''.

SEC. 502. PURPOSES.

    The purposes of this title are to provide for the establishment of 
individual development account programs that will--
            (1) provide individuals and families with limited means an 
        opportunity to accumulate assets and to enter the financial 
        mainstream,
            (2) promote education, homeownership, and the development 
        of small businesses,
            (3) stabilize families and build communities, and
            (4) support continued United States economic expansion.

SEC. 503. DEFINITIONS.

    As used in this title:
            (1) Eligible individual.--
                    (A) In general.--The term ``eligible individual'' 
                means, with respect to any taxable year, an individual 
                who--
                            (i) has attained the age of 18 but not the 
                        age of 61 as of the last day of such taxable 
                        year,
                            (ii) is a citizen or lawful permanent 
                        resident (within the meaning of section 
                        7701(b)(6) of the Internal Revenue Code of 
                        1986) of the United States as of the last day 
                        of such taxable year,
                            (iii) was not a student (as defined in 
                        section 151(c)(4) of such Code) for the 
                        immediately preceding taxable year,
                            (iv) is not an individual with respect to 
                        whom a deduction under section 151 of such Code 
                        is allowable to another taxpayer for a taxable 
                        year of the other taxpayer ending during the 
                        immediately preceding taxable year of the 
                        individual,
                            (v) is not a taxpayer described in 
                        subsection (c), (d), or (e) of section 6402 of 
                        such Code for the immediately preceding taxable 
                        year,
                            (vi) is not a taxpayer described in section 
                        1(d) of such Code for the immediately preceding 
                        taxable year, and
                            (vii) is a taxpayer the modified adjusted 
                        gross income of whom for the immediately 
                        preceding taxable year does not exceed--
                                    (I) $18,000, in the case of a 
                                taxpayer described in section 1(c) of 
                                such Code,
                                    (II) $30,000, in the case of a 
                                taxpayer described in section 1(b) of 
                                such Code, and
                                    (III) $38,000, in the case of a 
                                taxpayer described in section 1(a) of 
                                such Code.
                    (B) Inflation adjustment.--
                            (i) In general.--In the case of any taxable 
                        year beginning after 2004, each dollar amount 
                        referred to in subparagraph (A)(vii) shall be 
                        increased by an amount equal to--
                                    (I) such dollar amount, multiplied 
                                by
                                    (II) the cost-of-living adjustment 
                                determined under section (1)(f)(3) of 
                                the Internal Revenue Code of 1986 for 
                                the calendar year in which the taxable 
                                year begins, by substituting ``2003'' 
                                for ``1992''.
                            (ii) Rounding.--If any amount as adjusted 
                        under clause (i) is not a multiple of $50, such 
                        amount shall be rounded to the nearest multiple 
                        of $50.
                    (C) Modified adjusted gross income.--For purposes 
                of subparagraph (A)(v), the term ``modified adjusted 
                gross income'' means adjusted gross income--
                            (i) determined without regard to sections 
                        86, 893, 911, 931, and 933 of the Internal 
                        Revenue Code of 1986, and
                            (ii) increased by the amount of interest 
                        received or accrued by the taxpayer during the 
                        taxable year which is exempt from tax.
            (2) Individual development account.--The term ``Individual 
        Development Account'' means an account established for an 
        eligible individual as part of a qualified individual 
        development account program, but only if the written governing 
        instrument creating the account meets the following 
        requirements:
                    (A) The owner of the account is the individual for 
                whom the account was established.
                    (B) No contribution will be accepted unless it is 
                in cash, and, except in the case of any qualified 
                rollover, contributions will not be accepted for the 
                taxable year in excess of $1,500 on behalf of any 
                individual.
                    (C) The trustee of the account is a qualified 
                financial institution.
                    (D) The assets of the account will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
                    (E) Except as provided in section 507(b), any 
                amount in the account may be paid out only for the 
                purpose of paying the qualified expenses of the account 
                owner.
            (3) Parallel account.--The term ``parallel account'' means 
        a separate, parallel individual or pooled account for all 
        matching funds and earnings dedicated to an Individual 
        Development Account owner as part of a qualified individual 
        development account program, the trustee of which is a 
        qualified financial institution.
            (4) Qualified financial institution.--The term ``qualified 
        financial institution'' means any person authorized to be a 
        trustee of any individual retirement account under section 
        408(a)(2) of the Internal Revenue Code of 1986.
            (5) Qualified individual development account program.--The 
        term ``qualified individual development account program'' means 
        a program established upon approval of the Secretary under 
        section 504 after December 31, 2002, under which--
                    (A) Individual Development Accounts and parallel 
                accounts are held in trust by a qualified financial 
                institution, and
                    (B) additional activities determined by the 
                Secretary, in consultation with the Secretary of Health 
                and Human Services, as necessary to responsibly develop 
                and administer accounts, including recruiting, 
                providing financial education and other training to 
                Account owners, and regular program monitoring, are 
                carried out by the qualified financial institution.
            (6) Qualified expense distribution.--
                    (A) In general.--The term ``qualified expense 
                distribution'' means any amount paid (including through 
                electronic payments) or distributed out of an 
                Individual Development Account or a parallel account 
                established for an eligible individual if such amount--
                            (i) is used exclusively to pay the 
                        qualified expenses of the Individual 
                        Development Account owner or such owner's 
                        spouse or dependents,
                            (ii) is paid by the qualified financial 
                        institution--
                                    (I) except as otherwise provided in 
                                this clause, directly to the unrelated 
                                third party to whom the amount is due,
                                    (II) in the case of any qualified 
                                rollover, directly to another 
                                Individual Development Account and 
                                parallel account, or
                                    (III) in the case of a qualified 
                                final distribution, directly to the 
                                spouse, dependent, or other named 
                                beneficiary of the deceased Account 
                                owner, and
                            (iii) is paid after the Account owner has 
                        completed a financial education course if 
                        required under section 505(b).
                    (B) Qualified expenses.--
                            (i) In general.--The term ``qualified 
                        expenses'' means any of the following expenses 
                        approved by the qualified financial 
                        institution:
                                    (I) Qualified higher education 
                                expenses.
                                    (II) Qualified first-time homebuyer 
                                costs.
                                    (III) Qualified business 
                                capitalization or expansion costs.
                                    (IV) Qualified rollovers.
                                    (V) Qualified final distribution.
                            (ii) Qualified higher education expenses.--
                                    (I) In general.--The term 
                                ``qualified higher education expenses'' 
                                has the meaning given such term by 
                                section 529(e)(3) of the Internal 
                                Revenue Code of 1986, determined by 
                                treating the Account owner, the owner's 
                                spouse, or one or more of the owner's 
                                dependents as a designated beneficiary, 
                                and reduced as provided in section 
                                25A(g)(2) of such Code.
                                    (II) Coordination with other 
                                benefits.--The amount of expenses which 
                                may be taken into account for purposes 
                                of section 135, 529, or 530 of such 
                                Code for any taxable year shall be 
                                reduced by the amount of any qualified 
                                higher education expenses taken into 
                                account as qualified expense 
                                distributions during such taxable year.
                            (iii) Qualified first-time homebuyer 
                        costs.--The term ``qualified first-time 
                        homebuyer costs'' means qualified acquisition 
                        costs (as defined in section 72(t)(8)(C) of the 
                        Internal Revenue Code of 1986) with respect to 
                        a principal residence (within the meaning of 
                        section 121 of such Code) for a qualified 
                        first-time homebuyer (as defined in section 
                        72(t)(8)(D)(i) of such Code).
                            (iv) Qualified business capitalization or 
                        expansion costs.--
                                    (I) In general.--The term 
                                ``qualified business capitalization or 
                                expansion costs'' means qualified 
                                expenditures for the capitalization or 
                                expansion of a qualified business 
                                pursuant to a qualified business plan.
                                    (II) Qualified expenditures.--The 
                                term ``qualified expenditures'' means 
                                expenditures normally associated with 
                                starting or expanding a business and 
                                included in a qualified business plan, 
                                including costs for capital, plant, and 
                                equipment, inventory expenses, and 
                                attorney and accounting fees.
                                    (III) Qualified business.--The term 
                                ``qualified business'' means any 
                                business that does not contravene any 
                                law.
                                    (IV) Qualified business plan.--The 
                                term ``qualified business plan'' means 
                                a business plan which has been approved 
                                by the qualified financial institution 
                                and which meets such requirements as 
the Secretary may specify.
                            (v) Qualified rollovers.--The term 
                        ``qualified rollover'' means the complete 
                        distribution of the amounts in an Individual 
                        Development Account and parallel account to 
                        another Individual Development Account and 
                        parallel account established in another 
                        qualified financial institution for the benefit 
                        of the Account owner.
                            (vi) Qualified final distribution.--The 
                        term ``qualified final distribution'' means, in 
                        the case of a deceased Account owner, the 
                        complete distribution of the amounts in the 
                        Individual Development Account and parallel 
                        account directly to the spouse, any dependent, 
                        or other named beneficiary of the deceased.
            (7) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.

SEC. 504. STRUCTURE AND ADMINISTRATION OF QUALIFIED INDIVIDUAL 
              DEVELOPMENT ACCOUNT PROGRAMS.

    (a) Establishment of Qualified Individual Development Account 
Programs.--Any qualified financial institution may apply to the 
Secretary for approval to establish 1 or more qualified individual 
development account programs which meet the requirements of this title 
and for an allocation of the Individual Development Account limitation 
under section 45G(i)(3) of the Internal Revenue Code of 1986 with 
respect to such programs.
    (b) Basic Program Structure.--
            (1) In general.--All qualified individual development 
        account programs shall consist of the following 2 components 
        for each participant:
                    (A) An Individual Development Account to which an 
                eligible individual may contribute cash in accordance 
                with section 505.
                    (B) A parallel account to which all matching funds 
                shall be deposited in accordance with section 506.
            (2) Tailored ida programs.--A qualified financial 
        institution may tailor its qualified individual development 
        account program to allow matching funds to be spent on 1 or 
        more of the categories of qualified expenses.
            (3) No fees may be charged to idas.--A qualified financial 
        institution may not charge any fees to any Individual 
        Development Account or parallel account under a qualified 
        individual development account program.
    (c) Coordination With Public Housing Agency Individual Savings 
Accounts.--Section 3(e)(2) of the United States Housing Act of 1937 (42 
U.S.C. 1437a(e)(2)) is amended by inserting ``or in any Individual 
Development Account established under the Savings for Working Families 
Act of 2003'' after ``subsection''.
    (d) Tax Treatment of Parallel Accounts.--
            (1) In general.--Chapter 77 (relating to miscellaneous 
        provisions) is amended by adding at the end the following new 
        section:

``SEC. 7525. TAX INCENTIVES FOR INDIVIDUAL DEVELOPMENT PARALLEL 
              ACCOUNTS.

    ``For purposes of this title--
            ``(1) any account described in section 504(b)(1)(B) of the 
        Savings for Working Families Act of 2003 shall be exempt from 
        taxation,
            ``(2) except as provided in section 45G, no item of income, 
        expense, basis, gain, or loss with respect to such an account 
        may be taken into account, and
            ``(3) any amount withdrawn from such an account shall not 
        be includible in gross income.''.
            (2) Conforming amendment.--The table of sections for 
        chapter 77 is amended by adding at the end the following new 
        item:

                              ``Sec. 7525. Tax incentives for 
                                        individual development parallel 
                                        accounts.''.
    (e) Coordination of certain expenses.--Section 25A(g)(2) is amended 
by striking ``and'' at the end of subparagraph (C), by striking the 
period at the end of subparagraph (D) and inserting ``, and'', and by 
adding at the end the following new subparagraph:
                    ``(D) a qualified expense distribution with respect 
                to qualified higher education expenses from an 
                Individual Development Account or a parallel account 
                under section 507(a) of the Savings for Working 
                Families Act of 2003.

SEC. 505. PROCEDURES FOR OPENING AND MAINTAINING AN INDIVIDUAL 
              DEVELOPMENT ACCOUNT AND QUALIFYING FOR MATCHING FUNDS.

    (a) Opening an Account.--An eligible individual may open an 
Individual Development Account with a qualified financial institution 
upon certification that such individual has never maintained any other 
Individual Development Account (other than an Individual Development 
Account to be terminated by a qualified rollover).
    (b) Required Completion of Financial Education Course.--
            (1) In general.--Before becoming eligible to withdraw funds 
        to pay for qualified expenses, owners of Individual Development 
        Accounts must complete 1 or more financial education courses 
        specified in the qualified individual development account 
        program.
            (2) Standard and applicability of course.--The Secretary, 
        in consultation with representatives of qualified individual 
        development account programs and financial educators, shall not 
        later than January 1, 2004, establish minimum quality standards 
        for the contents of financial education courses and providers 
        of such courses described in paragraph (1) and a protocol to 
        exempt individuals from the requirement under paragraph (1) in 
        the case of hardship, lack of need, the attainment of age 65, 
        or a qualified final distribution.
    (c) Proof of Status as an Eligible Individual.--Federal income tax 
forms for the immediately preceding taxable year and any other evidence 
of eligibility which may be required by a qualified financial 
institution shall be presented to such institution at the time of the 
establishment of the Individual Development Account and in any taxable 
year in which contributions are made to the Account to qualify for 
matching funds under section 506(b)(1)(A).
    (d) Special Rule in the Case of Married Individuals.--For purposes 
of this title, if, with respect to any taxable year, 2 married 
individuals file a Federal joint income tax return, then not more than 
1 of such individuals may be treated as an eligible individual with 
respect to the succeeding taxable year.

SEC. 506. DEPOSITS BY QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT 
              PROGRAMS.

    (a) Parallel Accounts.--The qualified financial institution shall 
deposit all matching funds for each Individual Development Account into 
a parallel account at a qualified financial institution.
    (b) Regular Deposits of Matching Funds.--
            (1) In general.--Subject to paragraph (2), the qualified 
        financial institution shall deposit into the parallel account 
        with respect to each eligible individual the following amounts:
                    (A) A dollar-for-dollar match for the first $500 
                contributed by the eligible individual into an 
                Individual Development Account with respect to any 
                taxable year of such individual.
                    (B) Any matching funds provided by State, local, or 
                private sources in accordance with the matching ratio 
                set by those sources.
            (2) Timing of deposits.--A deposit of the amounts described 
        in paragraph (1) shall be made into a parallel account--
                    (A) in the case of amounts described in paragraph 
                (1)(A), not later than 30 days after the end of the 
                calendar quarter during which the contribution 
                described in such paragraph was made, and
                    (B) in the case of amounts described in paragraph 
                (1)(B), not later than 2 business days after such 
                amounts were provided.
            (3) Cross reference.--

                                For allowance of tax credit for 
Individual Development Account subsidies, including matching funds, see 
section 45G of the Internal Revenue Code of 1986.
    (c) Deposit of Matching Funds Into Individual Development Account 
of Individual Who Has Attained Age 65.--In the case of an Individual 
Development Account owner who attains the age of 65, the qualified 
financial institution shall deposit the funds in the parallel account 
with respect to such individual into the Individual Development Account 
of such individual on the later of--
            (1) the day which is the 1-year anniversary of the deposit 
        of such funds in the parallel account, or
            (2) the first business day of the taxable year of such 
        individual following the taxable year in which such individual 
        attained age 65.
    (d) Uniform Accounting Regulations.--To ensure proper recordkeeping 
and determination of the tax credit under section 45G of the Internal 
Revenue Code of 1986, the Secretary shall prescribe regulations with 
respect to accounting for matching funds in the parallel accounts.
    (e) Regular Reporting of Accounts.--Any qualified financial 
institution shall report the balances in any Individual Development 
Account and parallel account of an individual on not less than an 
annual basis to such individual.

SEC. 507. WITHDRAWAL PROCEDURES.

    (a) Withdrawals for Qualified Expenses.--
            (1) In general.--An Individual Development Account owner 
        may withdraw funds in order to pay qualified expense 
        distributions from such individual's--
                    (A) Individual Development Account, but only from 
                funds which have been on deposit in such Account for at 
                least 1 year, and
                    (B) parallel account, but only--
                            (i) from matching funds which have been on 
                        deposit in such parallel account for at least 1 
                        year,
                            (ii) from earnings in such parallel 
                        account, after all matching funds described in 
                        clause (i) have been withdrawn, and
                            (iii) to the extent such withdrawal does 
                        not result in a remaining balance in such 
                        parallel account which is less than the 
                        remaining balance in the Individual Development 
                        Account after such withdrawal.
            (2) Procedure.--Upon receipt of a withdrawal request which 
        meets the requirements of paragraph (1), the qualified 
        financial institution shall directly transfer the funds 
        electronically to the distributees described in section 
        503(6)(A)(ii). If a distributee is not equipped to receive 
        funds electronically, the qualified financial institution may 
        issue such funds by paper check to the distributee.
    (b) Withdrawals for Nonqualified Expenses.--An Individual 
Development Account owner may withdraw any amount of funds from the 
Individual Development Account for purposes other than to pay qualified 
expense distributions, but if, after such withdrawal, the amount in the 
parallel account of such owner (excluding earnings on matching funds) 
exceeds the amount remaining in such Individual Development Account, 
then such owner shall forfeit from the parallel account the lesser of 
such excess or the amount withdrawn.
    (c) Withdrawals From Accounts of Noneligible Individuals.--If the 
individual for whose benefit an Individual Development Account is 
established ceases to be an eligible individual, such account shall 
remain an Individual Development Account, but such individual shall not 
be eligible for any further matching funds under section 506(b)(1)(A) 
for contributions which are made to the Account during any taxable year 
when such individual is not an eligible individual.
    (d) Effect of Pledging Account as Security.--If, during any taxable 
year of the individual for whose benefit an Individual Development 
Account is established, that individual uses the Account, the 
individual's parallel account, or any portion thereof as security for a 
loan, the portion so used shall be treated as a withdrawal of such 
portion from the Individual Development Account for purposes other than 
to pay qualified expenses.

SEC. 508. CERTIFICATION AND TERMINATION OF QUALIFIED INDIVIDUAL 
              DEVELOPMENT ACCOUNT PROGRAMS.

    (a) Certification Procedures.--Upon establishing a qualified 
individual development account program under section 504, a qualified 
financial institution shall certify to the Secretary at such time and 
in such manner as may be prescribed by the Secretary and accompanied by 
any documentation required by the Secretary, that--
            (1) the accounts described in subparagraphs (A) and (B) of 
        section 504(b)(1) are operating pursuant to all the provisions 
        of this title, and
            (2) the qualified financial institution agrees to implement 
        an information system necessary to monitor the cost and 
        outcomes of the qualified individual development account 
        program.
    (b) Authority To Terminate Qualified IDA Program.--If the Secretary 
determines that a qualified financial institution under this title is 
not operating a qualified individual development account program in 
accordance with the requirements of this title (and has not implemented 
any corrective recommendations directed by the Secretary), the 
Secretary shall terminate such institution's authority to conduct the 
program. If the Secretary is unable to identify a qualified financial 
institution to assume the authority to conduct such program, then any 
funds in a parallel account established for the benefit of any 
individual under such program shall be deposited into the Individual 
Development Account of such individual as of the first day of such 
termination.

SEC. 509. REPORTING, MONITORING, AND EVALUATION.

    (a) Responsibilities of Qualified Financial Institutions.--
            (1) In general.--Each qualified financial institution that 
        operates a qualified individual development account program 
        under section 504 shall report annually to the Secretary within 
        90 days after the end of each calendar year on--
                    (A) the number of individuals making contributions 
                into Individual Development Accounts and the amounts 
                contributed,
                    (B) the amounts contributed into Individual 
                Development Accounts by eligible individuals and the 
                amounts deposited into parallel accounts for matching 
                funds,
                    (C) the amounts withdrawn from Individual 
                Development Accounts and parallel accounts, and the 
                purposes for which such amounts were withdrawn,
                    (D) the balances remaining in Individual 
                Development Accounts and parallel accounts, and
                    (E) such other information needed to help the 
                Secretary monitor the effectiveness of the qualified 
                individual development account program (provided in a 
                non-individually-identifiable manner).
            (2) Additional reporting requirements.--Each qualified 
        financial institution that operates a qualified individual 
        development account program under section 504 shall report at 
        such time and in such manner as the Secretary may prescribe any 
        additional information that the Secretary requires to be 
        provided for purposes of administering and supervising the 
        qualified individual development account program. This 
        additional data may include, without limitation, identifying 
        information about Individual Development Account owners, their 
        Accounts, additions to the Accounts, and withdrawals from the 
        Accounts.
    (b) Responsibilities of the Secretary.--
            (1) Monitoring protocol.--Not later than 12 months after 
        the date of the enactment of this Act, the Secretary, in 
        consultation with the Secretary of Health and Human Services, 
        shall develop and implement a protocol and process to monitor 
        the cost and outcomes of the qualified individual development 
        account programs established under section 504.
            (2) Annual reports.--For each year after 2003, the 
        Secretary shall submit a progress report to Congress on the 
        status of such qualified individual development account 
        programs. Such report shall, to the extent data are available, 
        include from a representative sample of qualified individual 
        development account programs information on--
                    (A) the characteristics of participants, including 
                age, gender, race or ethnicity, marital status, number 
                of children, employment status, and monthly income,
                    (B) deposits, withdrawals, balances, uses of 
                Individual Development Accounts, and participant 
                characteristics,
                    (C) the characteristics of qualified individual 
                development account programs, including match rate, 
                economic education requirements, permissible uses of 
                accounts, staffing of programs in full time employees, 
                and the total costs of programs, and
                    (D) process information on program implementation 
                and administration, especially on problems encountered 
                and how problems were solved.
            (3) Reauthorization report on cost and outcomes of idas.--
                    (A) In general.--Not later than July 1, 2008, the 
                Secretary of the Treasury shall submit a report to 
                Congress and the chairmen and ranking members of the 
                Committee on Finance, the Committee on Banking, 
                Housing, and Urban Affairs, and the Committee on 
                Health, Education, Labor, and Pensions of the Senate 
                and the Committee on Ways and Means, the Committee on 
                Banking and Financial Services, and the Committee on 
                Education and the Workforce of the House of 
                Representatives, in which the Secretary shall--
                            (i) summarize the previously submitted 
                        annual reports required under paragraph (2),
                            (ii) from a representative sample of 
                        qualified individual development account 
                        programs, include an analysis of--
                                    (I) the economic, social, and 
                                behavioral outcomes,
                                    (II) the changes in savings rates, 
                                asset holdings, and household debt, and 
                                overall changes in economic stability,
                                    (III) the changes in outlooks, 
                                attitudes, and behavior regarding 
                                savings strategies, investment, 
                                education, and family,
                                    (IV) the integration into the 
                                financial mainstream, including 
                                decreased reliance on alternative 
                                financial services, and increase in 
                                acquisition of mainstream financial 
                                products, and
                                    (V) the involvement in civic 
                                affairs, including neighborhood schools 
                                and associations,
                        associated with participation in qualified 
                        individual development account programs,
                            (iii) from a representative sample of 
                        qualified individual development account 
                        programs, include a comparison of outcomes 
                        associated with such programs with outcomes 
                        associated with other Federal Government social 
                        and economic development programs, including 
                        asset building programs, and
                            (iv) make recommendations regarding the 
                        reauthorization of the qualified individual 
                        development account programs, including--
                                    (I) recommendations regarding 
                                reforms that will improve the cost and 
                                outcomes of the such programs, 
                                including the ability to help low 
                                income families save and accumulate 
                                productive assets,
                                    (II) recommendations regarding the 
                                appropriate levels of subsidies to 
                                provide effective incentives to 
                                financial institutions and Account 
                                owners under such programs, and
                                    (III) recommendations regarding how 
                                such programs should be integrated into 
                                other Federal poverty reduction, asset 
                                building, and community development 
                                policies and programs.
                    (B) Authorization.--There is authorized to be 
                appropriated $2,500,000, for carrying out the purposes 
                of this paragraph.
            (4) Use of accounts in rural areas encouraged.--The 
        Secretary shall develop methods to encourage the use of 
        Individual Development Accounts in rural areas.

SEC. 510. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to the Secretary $1,000,000 
for fiscal year 2004 and for each fiscal year through 2011, for the 
purposes of implementing this title, including the reporting, 
monitoring, and evaluation required under section 509, to remain 
available until expended.

SEC. 511. MATCHING FUNDS FOR INDIVIDUAL DEVELOPMENT ACCOUNTS PROVIDED 
              THROUGH A TAX CREDIT FOR QUALIFIED FINANCIAL 
              INSTITUTIONS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits) is amended by adding at the end 
the following new section:

``SEC. 45G. INDIVIDUAL DEVELOPMENT ACCOUNT INVESTMENT CREDIT.

    ``(a) Determination of Amount.--For purposes of section 38, the 
individual development account investment credit determined under this 
section with respect to any eligible entity for any taxable year is an 
amount equal to the individual development account investment provided 
by such eligible entity during the taxable year under an individual 
development account program established under section 504 of the 
Savings for Working Families Act of 2003.
    ``(b) Applicable Tax.--For the purposes of this section, the term 
`applicable tax' means the excess (if any) of--
            ``(1) the tax imposed under this chapter (other than the 
        taxes imposed under the provisions described in subparagraphs 
        (C) through (Q) of section 26(b)(2)), over
            ``(2) the credits allowable under subpart B (other than 
        this section) and subpart D of this part.
    ``(c) Individual Development Account Investment.--For purposes of 
this section, the term `individual development account investment' 
means, with respect to an individual development account program in any 
taxable year, an amount equal to the sum of--
            ``(1) the aggregate amount of dollar-for-dollar matches 
        under such program under section 506(b)(1)(A) of the Savings 
        for Working Families Act of 2003 for such taxable year, plus
            ``(2) $50 with respect to each Individual Development 
        Account maintained--
                    ``(A) as of the end of such taxable year, but only 
                if such taxable year is within the 7-taxable-year 
                period beginning with the taxable year in which such 
                Account is opened, and
                    ``(B) with a balance of not less than $100 (other 
                than the taxable year in which such Account is opened).
    ``(d) Eligible Entity.--For purposes of this section, except as 
provided in regulations, the term `eligible entity' means a qualified 
financial institution.
    ``(e) Other Definitions.--For purposes of this section, any term 
used in this section and also in the Savings for Working Families Act 
of 2003 shall have the meaning given such term by such Act.
    ``(f) Denial of Double Benefit.--
            ``(1) In general.--No deduction or credit (other than under 
        this section) shall be allowed under this chapter with respect 
        to any expense which--
                    ``(A) is taken into account under subsection 
                (c)(1)(A) in determining the credit under this section, 
                or
                    ``(B) is attributable to the maintenance of an 
                Individual Development Account.
            ``(2) Determination of amount.--Solely for purposes of 
        paragraph (1)(B), the amount attributable to the maintenance of 
        an Individual Development Account shall be deemed to be the 
        dollar amount of the credit allowed under subsection (c)(l)(B) 
        for each taxable year such Individual Development Account is 
        maintained.
    ``(g) Credit May Be Transferred.--
            ``(1) In general.--An eligible entity may transfer any 
        credit allowable to the eligible entity under subsection (a) to 
        any person other than to another eligible entity which is 
        exempt from tax under this title. The determination as to 
        whether a credit is allowable shall be made without regard to 
        the tax-exempt status of the eligible entity.
            ``(2) Consent required for revocation.--Any transfer under 
        paragraph (1) may be revoked only with the consent of the 
        Secretary.
    ``(h) Regulations.--The Secretary may prescribe such regulations as 
may be necessary or appropriate to carry out this section, including
            ``(1) such regulations as necessary to insure that any 
        credit described in subsection (g)(1) is claimed once and not 
        retransferred by a transferee, and
            ``(2) regulations providing for a recapture of the credit 
        allowed under this section (notwithstanding any termination 
        date described in subsection (i)) in cases where there is a 
        forfeiture under section 507(b) of the Savings for Working 
        Families Act of 2003 in a subsequent taxable year of any amount 
        which was taken into account in determining the amount of such 
        credit.
    ``(i) Application of Section.--
            ``(1) In general.--This section shall apply to any 
        expenditure made in any taxable year ending after December 31, 
        2003, and beginning on or before January 1, 2011, with respect 
        to any Individual Development Account which--
                    ``(A) is opened before January 1, 2011, and
                    ``(B) as determined by the Secretary, when added to 
                all of the previously opened Individual Development 
                Accounts, does not exceed--
                            ``(i) 100,000 Accounts if opened after 
                        December 31, 2003, and before January 1, 2007,
                            ``(ii) an additional 100,000 Accounts if 
                        opened after December 31, 2006, and before 
                        January 1, 2009, but only if, except as 
                        provided in paragraph (4), the total number of 
                        Accounts described in clause (i) are opened and 
                        the Secretary determines that such Accounts are 
                        being reasonably and responsibly administered, 
                        and
                            ``(iii) an additional 100,000 Accounts if 
                        opened after December 31, 2008, and before 
                        January 1, 2011, but only if the total number 
                        of Accounts described in clauses (i) and (ii) 
                        are opened and the Secretary makes a 
                        determination described in paragraph (2).
        Notwithstanding the preceding sentence, this section shall 
        apply to amounts which are described in subsection (c)(1)(A) 
        and which are timely deposited into a parallel account during 
        the 30-day period following the end of last taxable year 
        beginning before January 1, 2011.
            ``(2) Determination with respect to third group of 
        accounts.--A determination is described in this paragraph if 
        the Secretary determines that--
                    ``(A) substantially all of the previously opened 
                Accounts have been reasonably and responsibly 
                administered prior to the date of the determination,
                    ``(B) the individual development account programs 
                have increased net savings of participants in the 
                programs,
                    ``(C) participants in the individual development 
                account programs have increased Federal income tax 
                liability and decreased utilization of Federal 
                assistance programs relative to similarly situated 
                individuals that did not participate in the individual 
                development account programs, and
                    ``(D) the sum of the estimated increased Federal 
                tax liability and reduction of Federal assistance 
                program benefits to participants in the individual 
                development account programs is greater than the cost 
                of the individual development account programs to the 
                Federal government.
            ``(3) Determination of limitation.--The limitation on the 
        number of Individual Development Accounts under paragraph 
        (1)(B) shall be allocated by the Secretary among qualified 
        individual development account programs selected by the 
        Secretary and, in the case of the limitation under clause (iii) 
        of such paragraph, shall be equally divided among the States.
            ``(4) Special rule if smaller number of accounts are 
        opened.--For purposes of paragraph (1)(B)(ii)--
                            ``(i) In general.--If less than 100,000 
                        Accounts are opened before January 1, 2007, 
                        such paragraph shall be applied by substituting 
                        ``applicable number of Accounts' for `100,000 
                        Accounts'.
                            ``(ii) Applicable number.--For purposes of 
                        clause (i), the applicable number equals the 
                        lesser of--
                                    ``(I) 75,000, or
                                    ``(II) 3 times the number of 
                                Accounts opened before January 1, 
                                2007.''.
    (b) Credit Treated as Business Credit.--Section 38(b) (relating to 
current year business credit) is amended by striking ``plus'' at the 
end of paragraph (14), by striking the period at the end of paragraph 
(15) and inserting ``, plus'', and by adding at the end the following 
new paragraph:
            ``(16) the individual development account investment credit 
        determined under section 45G(a).''.
    (c) No Carrybacks.--Subsection (d) of section 39 (relating to 
carryback and carryforward of unused credits) is amended by adding at 
the end the following:
            ``(11) No carryback of section 45g credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the individual development 
        account investment credit determined under section 45G may be 
        carried back to a taxable year ending before January 1, 
        2004.''.
    (d) Conforming Amendment.--The table of sections for subpart C of 
part IV of subchapter A of chapter 1 is amended by adding at the end 
the following new item:

                              ``Sec. 45G. Individual development 
                                        account investment credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2003.

SEC. 512. ACCOUNT FUNDS DISREGARDED FOR PURPOSES OF CERTAIN MEANS-
              TESTED FEDERAL PROGRAMS.

    Notwithstanding any other provision of Federal law (other than the 
Internal Revenue Code of 1986) that requires consideration of 1 or more 
financial circumstances of an individual, for the purpose of 
determining eligibility to receive, or the amount of, any assistance or 
benefit authorized by such provision to be provided to or for the 
benefit of such individual, any amount (including earnings thereon) in 
any Individual Development Account of such individual and any matching 
deposit made on behalf of such individual (including earnings thereon) 
in any parallel account shall be disregarded for such purpose with 
respect to any period during which such individual maintains or makes 
contributions into such Individual Development Account.

              TITLE VI--MANAGEMENT OF EXEMPT ORGANIZATIONS

SEC. 601. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--There is authorized to be appropriated to the 
Secretary of the Treasury $80,000,000 for each fiscal year to carry out 
the administration of exempt organizations by the Internal Revenue 
Service.
    (b) Implementation of Section 527.--There is authorized to be 
appropriated to the Secretary of the Treasury $3,000,000 to carry out 
the provisions of Public Laws 106-230 and 107-276 relating to section 
527 of the Internal Revenue Code of 1986.
                                 <all>