Short title, etc

(a)

Short title

This Act may be cited as the

Charity Enhancement Act of 2008

. (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.

Sec. 2. Funds advised by certain public charities and governmental entities not treated as donor advised funds.

Sec. 3. Certain scholarship distributions from donor advised funds not treated as taxable distributions.

Sec. 4. Repeal of special written acknowledgment requirement for charitable contributions to donor advised funds.

Sec. 5. Reasonable compensation paid by supporting organizations to substantial contributors not treated as an excess benefit.

Sec. 6. Exception from holdings and payout requirements for longstanding, fully funded type III supporting organizations.

Sec. 7. Contributions by Indian tribal governments treated same as contributions by States.

Sec. 8. Electronic filing of exempt organization annual returns.

Sec. 9. Expansion of bad check penalty to electronic payments, etc.

Funds advised by certain public charities and governmental entities not treated as donor advised funds

(a)

In general

Subparagraph (B) of section 4966(d)(2) is amended by striking or at the end of clause (i), by striking the period at the end of clause (ii) and inserting , or, and by adding at the end the following new clause:

(iii)if all contributions to such fund or account have been made, and all advisory privileges referred to in subparagraph (A)(iii) with respect to such fund or account have been exercised, by either— (I)one or more organizations described in clause (i), (ii), (iii), (iv), or (vi) of section 170(b)(1)(A) or section 509(a)(2), or (II)one or more entities described in section 170(c)(1).

(b)

Effective date

The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act.

Certain scholarship distributions from donor advised funds not treated as taxable distributions

(a)

In general

Subsection (c) of section 4966 is amended by adding at the end the following new paragraph:

(3)

Exception for certain scholarship distributions

(A)

In general

The term taxable distribution shall not include any qualified scholarship distribution from a qualified scholarship fund. (B)

Qualified scholarship distribution

The term qualified scholarship distribution means any grant to a natural person for travel, study, or other similar purposes made from a donor advised fund if all such grants meet the requirements of subsection (d)(2)(B)(ii)(III). (C)

Qualified scholarship fund

The term qualified scholarship fund means any donor advised fund if— (i)the advisory privileges referred to in subsection (d)(2)(A)(iii) with respect to such fund are exercised solely by an organization described in paragraph (4) of section 501(c) and exempt from tax under section 501(a), and (ii)substantially all of the distributions from such fund are qualified scholarship distributions.

(b)

Application of tax on prohibited benefits to qualified scholarship distributions

Subsection (c) of section 4967 is amended by adding at the end the following new paragraph:

(3)

Qualified scholarship funds

Each substantial contributor (as defined in section 4958(c)(3)(C)) to a qualified scholarship fund and each family member (within the meaning of section 4958(f)(4)) of such person shall be treated as a person described in subsection (d) with respect to such fund.

(c)

Effective date

The amendments made by this section shall apply to distributions made after the date of the enactment of this Act.

Repeal of special written acknowledgment requirement for charitable contributions to donor advised funds

(a)

In general

Paragraph (18) of section 170(f) is amended— (1)by striking subparagraph (B), (2)by striking if— and all that follows through the sponsoring organization (as defined in section 4966(d)(1)) and inserting if the sponsoring organization (as defined in section 4966(d)(1))), and (3)by redesignating clauses (i) and (ii) of subparagraph (A) (as in effect before amendment by paragraph (2)) as subparagraphs (A) and (B) and by moving such subparagraphs 2 ems to the left. (b)

Effective date

The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act.

Reasonable compensation paid by supporting organizations to substantial contributors not treated as an excess benefit

(a)

In general

Clause (ii) of section 4958(c)(3)(A) is amended to read as follows:

(ii)the term excess benefit includes, with respect to any transaction described in clause (i)— (I)in the case of any grant, loan, or similar payment, the amount of such grant, loan, or similar payment, and (II)in the case of any compensation or similar payment, the amount by which the value of the economic benefit provided exceeds the value of the consideration (including the performance of services) received for providing such benefit.

(b)

Effective date

The amendment made by this section shall apply to amounts paid pursuant to transactions entered into after the date of the enactment of this Act.

Exception from holdings and payout requirements for longstanding, fully funded type III supporting organizations

(a)

Holdings requirements

Subsection (f) of section 4943 is amended by adding at the end the following new paragraph:

(8)

Exception for certain longstanding fully funded type III supporting organizations

Paragraph (1) shall not apply to any organization if— (A)the organization was established before January 1, 1970, (B)the organization has not accepted any substantial contributions after December 31, 1970, (C)no donor to the organization was alive on August 17, 2006, and (D)no family member (within the meaning of section 4958(f)(4)) of any donor is an organization manager (as defined in section 4958(f)(2)).

(b)

Payout requirements

Section 1241(d)(1) of the Pension Protection Act of 2006 shall not apply to any organization described in section 4943(f)(8) of the Internal Revenue Code of 1986, as added by this section. (c)

Effective date

The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act.

Contributions by Indian tribal governments treated same as contributions by States

(a)

In general

Section 7871(a) (relating to Indian tribal governments treated as States for certain purposes) is amended by striking and at the end of paragraph (6), by striking the period at the end of paragraph (7) and inserting ; and, and by adding at the end the following new paragraph:

(8)for purposes of— (A)determining support of an organization described in section 170(b)(1)(A)(vi), and (B)determining whether an organization is described in paragraph (1) or (2) of section 509(a) for purposes of section 509(a)(3).

(b)

Effective date

The amendments made by this section shall apply with respect to— (1)support received on or after the date of the enactment of this Act, and (2)the determination of the status of any organization with respect to any taxable year beginning after such date of enactment.

Electronic filing of exempt organization annual returns

(a)

In general

Subsection (d) of section 6104 (relating to public inspection of certain annual returns, reports, applications for exemption, and notices of status) is amended— (1)by redesignating the paragraph relating to disclosure of reports by Internal Revenue Service as paragraph (7), (2)by redesignating the paragraph relating to application to nonexempt charitable trusts and nonexempt private foundations as paragraph (8), and (3)by adding at the end the following new paragraph:

(9)

Returns required on magnetic media, etc

Any organization (other than an organization exempt from tax under section 527(a)) which— (A)is required to make available information for inspection under paragraph (1)(A), and (B)would be required to file returns on magnetic media or in other machine-readable form under subsection (e) of section 6011 if such subsection were applied by substituting at least 5 returns for at least 250 returns in paragraph (2)(A) thereof,

shall file the information referred to in clauses (i) and (ii) of paragraph (1)(A) on such magnetic media or in other machine-readable form.

(b)

Effective date

The amendments made by subsection (a) shall apply to returns required to be filed for taxable years beginning after the date of the enactment of this Act.

Expansion of bad check penalty to electronic payments, etc

(a)

In general

Section 6657 (relating to bad checks) is amended by adding at the end the following: Except as otherwise provided by the Secretary, any authorization of a payment by commercially acceptable means (within the meaning of section 6311) shall be treated for purposes of this section in the same manner as a check.. (b)

Effective date

The amendment made by subsection (a) shall apply to authorizations of payments made after December 31, 2005.