[Congressional Record Volume 152, Number 133 (Wednesday, December 6, 2006)]
[House]
[Pages H8812-H8813]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  RELIGIOUS LIBERTY AND CHARITABLE DONATION CLARIFICATION ACT OF 2006

  Mr. SENSENBRENNER. Mr. Speaker, I move to suspend the rules and pass 
the Senate bill (S. 4044) to clarify the treatment of certain 
charitable contributions under title 11, United States Code.
  The Clerk read as follows:

                                S. 4044

       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 ``Religious Liberty and 
     Charitable Donation Clarification Act of 2006''.

     SEC. 2. TREATMENT OF CERTAIN CONTRIBUTIONS IN BANKRUPTCY.

       Section 1325(b)(3) of title 11, United States Code, is 
     amended by inserting ``, other than subparagraph (A)(ii) of 
     paragraph (2),'' after ``paragraph (2)''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Wisconsin (Mr. Sensenbrenner) and the gentleman from Michigan (Mr. 
Conyers) each will control 20 minutes.
  The Chair recognizes the gentleman from Wisconsin.


                             General Leave

  Mr. SENSENBRENNER. Mr. Speaker, I ask unanimous consent that all 
Members may have 5 legislative days within which to revise and extend 
their remarks and include extraneous material on Senate 4044 currently 
under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Wisconsin?
  There was no objection.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of S. 4044, the Religious Liberty and 
Charitable Donation Clarification Act of 2006.
  During the 105th Congress the Religious Liberty and Charitable 
Donation Protection Act of 1998 was signed into law by President 
Clinton. This bipartisan measure, introduced by Senator Hatch, sought 
to protect the rights of debtors to continue to make religious and 
charitable contributions after they filed for bankruptcy relief. In 
addition, the act protects religious and charitable organizations from 
having to turn over to bankruptcy trustees donations these 
organizations received from individuals who subsequently filed for 
bankruptcy relief.
  As many of you will recall, a major overhaul of the Bankruptcy Code 
was enacted last year as the Bankruptcy Abuse Prevention and Consumer 
Protection Act. The clear intent of that act was not to disturb the 
rights of debtors to continue to make charitable contributions or to 
tithe pursuant to the 1998 act. Nonetheless, at least one court has 
construed Bankruptcy Code section 1325, amended by the 2005 act, to 
prohibit chapter 13 debtors with above-median incomes from making 
charitable contributions or tithing.

[[Page H8813]]

  To address this judicial confusion, this bill simply clarifies that a 
chapter 13 debtor who is subject to section 1325(b)(3) of the 
Bankruptcy Code, may make charitable contributions or tithe to the same 
extent determined in accordance with Bankruptcy Code section 
1325(b)(2)(A)(ii).
  S. 4044 is a bipartisan measure that makes good sense. Donations are 
used by religious or charitable organizations to fund valuable services 
to society which serve the common good. This principle, for example, is 
recognized in the Internal Revenue Code's provisions concerning the 
deductibility of certain charitable contributions. Individuals who, for 
religious or other reasons, wish to donate to such organizations, even 
if they are in bankruptcy themselves, should not be deprived of this 
right.
  I urge my colleagues to support this bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. CONYERS. Mr. Speaker, I yield myself as much time as I may 
consume. And I am pleased to rise in support of the Religious Liberty 
and Charitable Donations Act of 2006.
  This, ladies and gentlemen, is a continuation of an effort we began 
in 1997 when Congress responded to cases holding that pre-petition 
tithes and other charitable contributions could be deemed to be 
fraudulent transfers, and that the trustee could recoup these tithes 
from the religious institutions receiving the donations.
  We all agreed that this was a clearly perverse result, and to clarify 
the law we passed the measure, Religious Liberty and Charitable 
Donation Protection Act of 1998.
  Then a funny thing happened. This Congress forgot about the value of 
religious charity embodied in that legislation. Instead, forsaking the 
biblical injunction to forgive debts and deal generously with the poor, 
this Congress became a registered agent for the credit card industry.
  How?
  Well, it is because of the aggressive overreaching of the lending 
industry and a Congress willing to write into law any scrap of paper 
handed to it by large financial institutions that we have come to this 
point today. The decision in the Diagostino case relied solely on the 
text of the law Congress passed. It restricts a debtor in chapter 13, 
with current monthly income above the State median, to the narrow 
strictures of the means test which relies on what the IRS says a person 
needs to live on.
  We debated the reliance on IRS guidelines to determine what a family 
needs to survive. We were all told not to worry, the IRS knows best and 
will provide all. Well, almost all.
  It turns out that when you owe the IRS money, they don't want you 
making donations to your house of worship or to charity. And the IRS 
rule became a part of the Bankruptcy Code because Members of this House 
voted to give IRS bureaucrats that power.
  We had managed to get a statutory allowance for tithing in the means 
test and in chapter 13, but the final language pushed through by the 
sponsors and the credit card industry did an end run around these 
provisions.
  And that is how we got here. And I am glad that there is a will to 
fix it. This bill will allow chapter 13 debtors to tithe in their plans 
on the same basis as provided in the section 1325(b)(2)(A)(ii).
  Keep in mind that while we are fixing the law for tithes and other 
charitable donations, basic problems in the law remain unchanged.
  By wiping out the allowable expenses in chapter 13 for debtors with 
an income above the State median and replacing them with rigid IRS-
based means tests, the new law still leaves families and small 
businesses at the tender mercies of the IRS. What else will we find was 
left out?
  When the new law was being considered, Members were assured that the 
IRS guidelines would provide the right answer in all cases. And as we 
have discovered, that hasn't worked out as well as the credit card 
industry said it would.
  This bill is supported by the United Way, the Red Cross, the National 
Council of Churches, Interfaith Alliance, the United Church of Christ, 
the National Baptist Churches USA, and the African Methodist Episcopal 
Church and others. I am pleased to urge all Members to support it.
  But Members are fooling themselves if they think this is a discrete 
problem in a law that one proponent has described as perfect and that 
the sponsors told us was so well drafted that no amendments could even 
be considered.
  The hubris has hurt real Americans and it will again.
  Let's fix this mistake. It is the right thing to do, but we had 
better get used to doing it. The new Code is a disaster, the natural 
consequence of subcontracting work out of the Congress to lobbyists, 
which I am sure will be coming to an end very shortly.
  I urge the passage of this legislation. I congratulate the chairman 
of the committee for bringing this matter to our attention.

                              {time}  1530

  Mr. CONYERS. Mr. Speaker, I yield back the balance of my time.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself the balance of my 
time.
  Mr. Speaker, just very briefly, bringing this bill up in passing 
shows that the U.S. House of Representatives on a bipartisan basis has 
a much bigger heart than the Internal Revenue Service. Some people may 
have doubted that in the past. We are here to show them that they are 
wrong.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Wisconsin (Mr. Sensenbrenner) that the House suspend the 
rules and pass the Senate bill, S. 4044.
  The question was taken; and (two-thirds of those voting having 
responded in the affirmative) the rules were suspended and the Senate 
bill was passed.
  A motion to reconsider was laid on the table.

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