[Congressional Record Volume 147, Number 62 (Tuesday, May 8, 2001)]
[Extensions of Remarks]
[Pages E745-E746]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   A BILL TO AMEND THE INTERNAL REVENUE CODE OF 1986 TO PROVIDE THAT 
  ANCESTORS AND LINEAL DESCENDANTS OF PAST OR PRESENT MEMBERS OF THE 
   ARMED FORCES SHALL BE TAKEN INTO ACCOUNT IN DETERMINING WHETHER A 
               VETERANS' ORGANIZATION IS EXEMPT FROM TAX

                                 ______
                                 

                           HON. AMO HOUGHTON

                              of new york

                    in the house of representatives

                          Tuesday, May 8, 2001

  Mr. HOUGHTON. Mr. Speaker, I am pleased to join my colleague from New 
York, Mr. Rangel, together with a number of other colleagues, in 
introducing our bill to fix a current problem in the Internal Revenue 
Code regarding use of American Legion Post facilities by members and 
their families. That is, who qualifies as a ``member'' versus a guest, 
for purposes of unrelated business income and the exempt status of the 
Legion Posts. We do not believe Congress intended or contemplated that 
use of the facilities by families of the member would result in 
unrelated business income, or worse yet, the possibility of losing the 
Post's tax exemption under Section 501(c)(19).
  By Congressional charter, only veterans who served during 
specifically designated wars may become ``members'' of the American 
Legion. Section 501(c)(19) requires only that 75% of the members be 
current or former members of the Armed Forces, and substantially all 
the other members are cadets, spouses, widows or widowers of past or 
present members. The IRS says substantially all is 90 percent. The 
Legion has many programs, such as the Sons of the American Legion 
(SAL), as well as programs involving youth and family support groups. 
All are designed to further the purposes for which the exemption was 
granted.
  The Post is a family gathering place for many social and patriotic 
activities. As a result, many family members of numerous generations 
attend these events. Some relatives are specifically treated as 
members, others are not. Also questions arise as to the status of the 
members in the SAL, as well as relatives not specifically covered in 
regulations, i.e. great grandparents, great grandchildren, etc., and 
whether they are perhaps ``associate or social members, and if they 
count for the 90% test. The answers could determine the extent of 
unrelated business taxable income as well as exempt status. This is not 
an issue regarding true guests, i.e. unrelated individuals who are, and 
must be, accompanied by a member. Nor is any substantive change 
contemplated regarding the sale of life and health insurance to members 
as provided in Section 512(a)(4). That section would be amended to 
conform the definition to Congressional charter members and their 
dependents.
  Our bill would eliminate these potential issues by providing that the 
definition of

[[Page E746]]

``member'' for purposes of the exemption status and unrelated business 
income would be expanded to include ``ancestors or lineal descendants 
of the member'' (i.e. past or present member of the Armed Services 
meeting the Congressional charter definition).
  We believe this change is not only fair, but recognizes the original 
intent of Congress, and the fact that more distant relatives of the 
member will come into existence over time. We hope our colleagues will 
join us in cosponsoring this legislation. Thank you.

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