Flexible giving accounts

(a)

In general

Subsection (a) of section 132 of the Internal Revenue Code of 1986 is amended by striking or at the end of paragraph (7), by striking the period at the end of paragraph (8) and inserting , or, and by inserting after paragraph (8) the following:

(9)flexible giving account.

(b)

Flexible giving account

Section 132 of such Code is amended by redesignating subsection (o) as subsection (p) and by inserting after subsection (n) the following:

(o)

Flexible giving account

(1)

In general

(A)

Flexible giving account

For purposes of this subsection, a flexible giving account is an account under an arrangement which is a separate written plan of an employer for the exclusive benefit of all eligible employees under which—(i)an employee may elect—(I)to receive a reduction in compensation and have the employer deposit the amount of the reduction in a flexible giving account of the electing employee, and(II)before the reduction under subclause (I), to designate one or more eligible entities to which distributions are to be made from the account,(ii)the employer will not make any reduction under clause (i)(I) unless one or more entities have been designated under clause (i)(II),(iii)the employer, as soon after the deposit under clause (i)(I) as practicable, makes the disbursements designated under clause (i),(iv)the employer provides reasonable notification of the availability and terms of the arrangement to all eligible employees,(v)the employer maintains a separate flexible giving account on behalf of each employee for whom an election is in effect clause (i), and(vi)the employer agrees to furnish to each participating employee, on or before January 31 of each year, a written accounting of the employee’s flexible giving account showing deposits and disbursements during the previous calendar year.(B)

Maximum reduction

The amount of a reduction under subparagraph (A) for a taxable year shall not exceed $2,700.(2)

Eligible employee

For purposes of this subsection—(A)

In general

(i)

Eligible employee

The term eligible employee means, with respect to a flexible giving account, any employee who is not a highly compensated or key employee and who is eligible to participate in the arrangement.(ii)

Highly compensated employee

The term highly compensated employee has the meaning given such term by section 414(q).(iii)

Key employee

The term key employee has the meaning given such term by section 416(i).(B)

Certain employees may be excluded

For purposes of subparagraph (A), an employer may elect to exclude under the arrangement described in paragraph (1) any employee who—(i)has not attained the age of 21 before the close of a plan year of the arrangement,(ii)has less than 1 year of service with the employer as of any day during the plan year, and(iii)is described in section 410(b)(3)(C) (relating to nonresident aliens working outside the United States).(C)

Shorter service period; younger age

An arrangement may provide a shorter period of service or younger age for purposes of subparagraph (B).(3)

Tax treatment of distributions

(A)

In general

Any distribution from a flexible giving account shall not be includible in the gross income of the distributee.(B)

Coordination with section 170

Distributions from the flexible giving account of an employee—(i)shall be treated as a charitable contribution of the employee for purposes of section 170,(ii)shall not be taken into account under section 170(a) (relating to allowance of deduction), but(iii)shall be taken into account under section 170(b) (relating to percentage limitation).(C)

Identifying information

No distribution shall be excluded from the gross income under subparagraph (A) unless the taxpayer provides on the return of tax the name and address of the entity to whom the distribution is made. In the case of a failure to provide the information required by the preceding sentence, the preceding sentence shall not apply if it is shown that the taxpayer exercised due diligence in attempting to provide the information so required.(4)

Eligible entity

For purposes of this section, the term eligible entity means any entity described in paragraphs (1) through (5) of section 170(c) other than a private foundation described in subsection (b)(1)(F).

(c)

Effective date

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