[Congressional Record Volume 143, Number 89 (Monday, June 23, 1997)]
[House]
[Pages H4141-H4142]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CHARITABLE DONATION ANTITRUST IMMUNITY ACT OF 1997
Mr. HYDE. Mr. Speaker, I move to suspend the rules and pass the bill
(H.R. 1902) to immunize donations made in the form of charitable gift
annuities and charitable remainder trusts from the antitrust laws and
State laws similar to the antitrust laws.
The Clerk read as follows:
H.R. 1902
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Charitable Donation
Antitrust Immunity Act of 1997''.
SEC. 2. IMMUNITY FROM ANTITRUST LAWS.
The Charitable Gift Annuity Antitrust Relief Act of 1995
(15 U.S.C. 37 et seq.) is amended--
(1) by amending section 2 to read as follows:
``SEC. 2. IMMUNITY FROM ANTITRUST LAWS.
``(a) Inapplicability of Antitrust Laws.--Except as
provided in subsection (d), the antitrust laws, and any State
law similar to any of the antitrust laws, shall not apply to
charitable gift annuities or charitable remainder trusts.
``(b) Immunity.--Except as provided in subsection (d), any
person subjected to any legal proceeding for damages,
injunction, penalties, or other relief of any kind under the
antitrust laws, or any State law similar to any of the
antitrust laws, on account of setting or agreeing to rates of
return or other terms for, negotiating, issuing,
participating in, implementing, or otherwise being involved
in the planning, issuance, or payment of charitable gift
annuities or charitable remainder trusts shall have immunity
from suit under the antitrust laws, including the right not
to bear the cost, burden, and risk of discovery and trial,
for the conduct set forth in this subsection.
``(c) Treatment of Certain Annuities and Trusts.--Any
annuity treated as a charitable gift annuity, or any trust
treated as a charitable remainder trust, either--
``(1) in any filing by the donor with the Internal Revenue
Service; or
``(2) in any schedule, form, or written document provided
by or on behalf of the donee to the donor;
shall be conclusively presumed for the purposes of this Act
to be respectively a charitable gift annuity or a charitable
remainder trust, unless there has been a final determination
by the Internal Revenue Service that, for fraud or otherwise,
the donor's annuity or trust did not qualify respectively as
a charitable gift annuity or charitable remainder trust when
created.
``(d) Limitation.--Subsections (a) and (b) shall not apply
with respect to the enforcement of a State law similar to any
of the antitrust laws, with respect to charitable gift
annuities, or charitable remainder trusts, created after the
State enacts a statute, not later than December 8, 1998, that
expressly provides that subsections (a) and (b) shall not
apply with respect to such charitable gift annuities and such
charitable remainder trusts.''; and
(2) in section 3--
(A) by striking paragraph (1);
(B) by redesignating paragraph (2) as paragraph (1);
(C) by inserting after paragraph (1), as so redesignated,
the following:
``(2) Charitable remainder trust.--The term `charitable
remainder trust' has the meaning given it in section 664(d)
of the Internal Revenue Code of 1986 (26 U.S.C. 664(d)).'';
(D) by redesignating paragraphs (4) and (5) as paragraphs
(5) and (6), respectively; and
(E) by inserting after paragraph (3) the following:
``(4) Final determination.--The term `final determination'
includes an Internal Revenue Service determination, after
exhaustion of donor's and donee's administrative remedies,
disallowing the donor's charitable deduction for the year in
which the initial contribution was made because of the
donee's failure to comply at such time with the requirements
of section 501(m)(5) or 664(d), respectively, of the Internal
Revenue Code of 1986 (26 U.S.C. 501(m)(5), 664(d)).''.
SEC. 3. APPLICATION OF ACT.
This Act, and the amendments made by this Act, shall apply
with respect to all conduct occurring before, on, or after
the date of the enactment of this Act and shall apply in all
administrative and judicial actions pending on or commenced
after the date of the enactment of this Act.
SEC. 4. STUDY AND REPORT.
(a) Study and Report.--The Attorney General shall carry out
a study to determine the effect of this Act on markets for
noncharitable annuities, charitable gift annuities, and
charitable remainder trusts. The Attorney General shall
prepare a report summarizing the results of the study.
(b) Details of Study and Report.--The report referred to in
subsection (a) shall include any information on possible
inappropriate activity resulting from this Act and any
recommendations for legislative changes, including
recommendations for additional enforcement resources.
(c) Submission of Report.--The Attorney General shall
submit the report referred to in subsection (a) to the
Chairman and the ranking member of the Committee on the
Judiciary of the House of Representatives, and to the
Chairman and the ranking member of the Committee on the
Judiciary of the Senate, not later than 27 months after the
date of the enactment of this Act.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Illinois [Mr. Hyde] and the gentleman from Massachusetts [Mr. Frank]
each will control 20 minutes.
[[Page H4142]]
The Chair recognizes the gentleman from Illinois [Mr. Hyde].
(Mr. HYDE asked and was given permission to revise and extend his
remarks.)
General Leave
Mr. HYDE. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days to revise and extend their remarks on the bill
under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Illinois?
There was no objection.
Mr. HYDE. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I would state that in 1995, Congress learned of an
assault on charitable giving that was being waged in a class action
lawsuit underway in the Federal court in Texas. The defendants in the
case, a collection of charitable organizations which included the
Lutheran Church, the United Way, and Northwestern University, stood
accused of violating the antitrust laws by agreeing to use the same
annuity rate when is offering donors charitable gift annuities.
Charitable gift annuities are a vehicle for charitable giving. The
donor gives a charitable organization a sum of money. In return, the
donor receives a charitable deduction and the agreement of the donee to
pay back a fixed income for life. Depending on the annuity rate used,
the value of the life income in relation to the total donation
fluctuates, as does the amount of the charitable deduction.
Finding that there were strong public policy reasons to protect
charitable organizations from antitrust suits in this context, the
104th Congress enacted the Charitable Gift Annuity Antitrust Relief Act
of 1995. That act specifies that it is not a violation of the antitrust
laws for section 501(c)(3) organizations to agree to use the same
annuity rate when issuing charitable gift annuities. The bill was
unanimously approved in the House by a vote of 427 to 0; the Senate
passed the House bill by voice vote. The expectation was that the act
would lead to the dismissal of the class action suit and an end to the
Texas case.
Alas, this has not been the result. When the 1995 act was asserted as
a defense in the case, the judge denied the motion to dismiss, citing
new allegations and issues of fact which were allegedly raised under
the act. The Court's rulings make it clear that in order to achieve the
goal we originally intended, that is, to protect this kind of
charitable fundraising from the antitrust laws, we must act again. Two
issues in particular must be clarified: that all activity related to
the issuance of a charitable gift annuity is protected, and that the
Internal Revenue Service, not the district court, is the arbiter of
whether a particular annuity meets the criteria of a charitable gift
annuity.
{time} 1215
The bill before us today, the Charitable Donation Antitrust Immunity
Act of 1997, amends the 1995 act for that purpose. H.R. 1902 provides
antitrust protection for charitable gift annuities and charitable
remainder trusts, and grants immunity from antitrust suit to any person
involved in issuing or selling those annuities or trusts. It
establishes a conclusive presumption that a particular instrument is a
charitable gift annuity or charitable remainder trust if the donor has
treated it as one in filings with the Internal Revenue Service, or if
the donee has treated it as one in documents provided to the donor.
However, the conclusive presumption would not be available if the
Internal Revenue Service has made a final determination that the
annuity or trust was not qualified under the revenue laws.
H.R. 1902 is a bipartisan effort to redraft legislation to ensure
that the courts will interpret the law in a manner consistent with
congressional intent. The gentleman from Michigan [Mr. Conyers], the
ranking member, and I have worked closely on this legislation to ensure
that the exemption is drawn as narrowly as possible while still
achieving our goal. A companion bill has been introduced in the Senate
by Senators Coverdell, Dodd, and DeWine, and I anticipate it will
receive swift consideration in that body. I also should mention the
Antitrust Division of the Department of Justice has indicated they have
no objection to the new language.
Mr. Speaker, in these days of fiscal conservatism we are asking our
communities to do more and more. With the help of charitable
organizations, we stretch our government dollars to feed more hungry
people, build homes for the poor, and care for the less fortunate.
Every dollar raised by these organizations is needed to help in the
mission of the charity. By enacting H.R. 1902, we are making sure that
these scarce resources are not used to pay lawyers to defend a lawsuit
that Congress has deemed meritless, but instead to contribute to the
strength of our communities.
Mr. CONYERS. Mr. Speaker, as the Members of this House well know I am
a strong supporter of vigorous enforcement of the antitrust laws, and
as a general matter I do not favor any exemptions or exclusions from
the antitrust laws or legislation which would impact pending cases.
However, when it comes to beneficial cooperative activity by
charities I believe there is no legitimate role for the antitrust laws.
This is why when I learned last year that a group of plaintiffs had
brought an unfounded antitrust action against a large number of
charities who had agreed to use a common formula in offering gift
annuities, I cosponsored with Chairman Hyde H.R. 2525. That legislation
granted an antitrust immunity for charities offering gift annuities and
eventually passed the Congress unanimously and was signed into law by
the President.
Unfortunately, subsequent to the law's enaction, the plaintiffs
amended their complaint to allege that the charities' accountants and
lawyers had also participated in the antitrust conspiracy and charged
that the charities' tax exempt status was fraudulent. Despite Congress'
clear intent, rather than throw these frivolous allegations out, the
courts have continued to allow the case to proceed, allowing the
parties to engage in discovery. As a result, the charities continue to
face the risk of billions of dollars in damages and millions of dollars
in legal fees.
This bill would strengthen last year's law to clarify that actions by
professionals associated with charitable gift annuities are not subject
to the antitrust laws, and create a conclusive presumption of coverage
to entities treated as charities by the IRS. This should end the
wasteful litigation and allow the charities to focus their resources on
better serving our communities.
This law is narrowly crafted and specific. It will do no damage to
the letter or spirit of our antitrust laws. The language has been
carefully reviewed by the Justice Department and they have voiced no
objections to the bill. I urge the Members to join me in supporting
this important legislation.
Mr. FRANK of Massachusetts. Mr. Speaker, I believe that the
distinguished chairman has explained this quite adequately.
Mr. Speaker, I have no requests for time, and I yield back the
balance of my time.
Mr. HYDE. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore [Mr. Petri]. The question is on the motion
offered by the gentleman from Illinois [Mr. Hyde] that the House
suspend the rules and pass the bill, H.R. 1902.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill was passed.
A motion to reconsider was laid on the table.
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