[Congressional Record (Bound Edition), Volume 146 (2000), Part 6]
[Extensions of Remarks]
[Page 7769]
[From the U.S. 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

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                           HON. AMO HOUGHTON

                              of new york

                    in the house of representatives

                         Thursday, May 11, 2000

  Mr. HOUGHTON. Mr. Speaker, I am pleased to join my colleague from New 
York, Mr. Rangel, 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 percent 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 requires internally that 100 percent of its members be 
qualifying veterans. However, 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. At the present time, the regulations provide that 
certain relatives related to the war veteran qualify. These include 
grandparents, brother, sister, and grandchildren. Questions have been 
raised whether SALs count for the 100 percent or 90 percent test, or 
might be considered ``associate or social members.'' The same questions 
arise regarding auxiliary members and relatives beyond the position of 
the regulation, i.e. great grandparents, great grandchildren, etc. 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 ``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.

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