[Congressional Record (Bound Edition), Volume 154 (2008), Part 16]
[House]
[Pages 22745-22748]
[From the U.S. Government Publishing Office, www.gpo.gov]




                    CHARITY ENHANCEMENT ACT OF 2008

  Mr. LEWIS of Georgia. Mr. Speaker, I move to suspend the rules and 
pass the bill (H.R. 7083) to amend the Internal Revenue Code of 1986 to 
enhance charitable giving and improve disclosure and tax 
administration.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 7083

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE, ETC.

       (a) Short Title.--This Act may be cited as the ``Charity 
     Enhancement Act of 2008''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title, etc.
Sec. 2. Funds advised by certain public charities and governmental 
              entities not treated as donor advised funds.
Sec. 3. Certain scholarship distributions from donor advised funds not 
              treated as taxable distributions.
Sec. 4. Repeal of special written acknowledgment requirement for 
              charitable contributions to donor advised funds.
Sec. 5. Reasonable compensation paid by supporting organizations to 
              substantial contributors not treated as an excess 
              benefit.
Sec. 6. Exception from holdings and payout requirements for 
              longstanding, fully funded type III supporting 
              organizations.
Sec. 7. Contributions by Indian tribal governments treated same as 
              contributions by States.
Sec. 8. Electronic filing of exempt organization annual returns.
Sec. 9. Expansion of bad check penalty to electronic payments, etc.

     SEC. 2. FUNDS ADVISED BY CERTAIN PUBLIC CHARITIES AND 
                   GOVERNMENTAL ENTITIES NOT TREATED AS DONOR 
                   ADVISED FUNDS.

       (a) In General.--Subparagraph (B) of section 4966(d)(2) is 
     amended by striking ``or'' at the end of clause (i), by 
     striking the period at the end of clause (ii) and inserting 
     ``, or'', and by adding at the end the following new clause:
       ``(iii) if all contributions to such fund or account have 
     been made, and all advisory privileges referred to in 
     subparagraph (A)(iii) with respect to such fund or account 
     have been exercised, by either--

       ``(I) one or more organizations described in clause (i), 
     (ii), (iii), (iv), or (vi) of section 170(b)(1)(A) or section 
     509(a)(2), or
       ``(II) one or more entities described in section 
     170(c)(1).''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 3. CERTAIN SCHOLARSHIP DISTRIBUTIONS FROM DONOR ADVISED 
                   FUNDS NOT TREATED AS TAXABLE DISTRIBUTIONS.

       (a) In General.--Subsection (c) of section 4966 is amended 
     by adding at the end the following new paragraph:
       ``(3) Exception for certain scholarship distributions.--
       ``(A) In general.--The term `taxable distribution' shall 
     not include any qualified scholarship distribution from a 
     qualified scholarship fund.

[[Page 22746]]

       ``(B) Qualified scholarship distribution.--The term 
     `qualified scholarship distribution' means any grant to a 
     natural person for travel, study, or other similar purposes 
     made from a donor advised fund if all such grants meet the 
     requirements of subsection (d)(2)(B)(ii)(III).
       ``(C) Qualified scholarship fund.--The term `qualified 
     scholarship fund' means any donor advised fund if--
       ``(i) the advisory privileges referred to in subsection 
     (d)(2)(A)(iii) with respect to such fund are exercised solely 
     by an organization described in paragraph (4) of section 
     501(c) and exempt from tax under section 501(a), and
       ``(ii) substantially all of the distributions from such 
     fund are qualified scholarship distributions.''.
       (b) Application of Tax on Prohibited Benefits to Qualified 
     Scholarship Distributions.--Subsection (c) of section 4967 is 
     amended by adding at the end the following new paragraph:
       ``(3) Qualified scholarship funds.--Each substantial 
     contributor (as defined in section 4958(c)(3)(C)) to a 
     qualified scholarship fund and each family member (within the 
     meaning of section 4958(f)(4)) of such person shall be 
     treated as a person described in subsection (d) with respect 
     to such fund.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions made after the date of the 
     enactment of this Act.

     SEC. 4. REPEAL OF SPECIAL WRITTEN ACKNOWLEDGMENT REQUIREMENT 
                   FOR CHARITABLE CONTRIBUTIONS TO DONOR ADVISED 
                   FUNDS.

       (a) In General.--Paragraph (18) of section 170(f) is 
     amended--
       (1) by striking subparagraph (B),
       (2) by striking ``if--'' and all that follows through ``the 
     sponsoring organization (as defined in section 4966(d)(1))'' 
     and inserting ``if the sponsoring organization (as defined in 
     section 4966(d)(1)))'', and
       (3) by redesignating clauses (i) and (ii) of subparagraph 
     (A) (as in effect before amendment by paragraph (2)) as 
     subparagraphs (A) and (B) and by moving such subparagraphs 2 
     ems to the left.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 5. REASONABLE COMPENSATION PAID BY SUPPORTING 
                   ORGANIZATIONS TO SUBSTANTIAL CONTRIBUTORS NOT 
                   TREATED AS AN EXCESS BENEFIT.

       (a) In General.--Clause (ii) of section 4958(c)(3)(A) is 
     amended to read as follows:
       ``(ii) the term `excess benefit' includes, with respect to 
     any transaction described in clause (i)--

       ``(I) in the case of any grant, loan, or similar payment, 
     the amount of such grant, loan, or similar payment, and
       ``(II) in the case of any compensation or similar payment, 
     the amount by which the value of the economic benefit 
     provided exceeds the value of the consideration (including 
     the performance of services) received for providing such 
     benefit.''.

       (b) Effective Date.--The amendment made by this section 
     shall apply to amounts paid pursuant to transactions entered 
     into after the date of the enactment of this Act.

     SEC. 6. EXCEPTION FROM HOLDINGS AND PAYOUT REQUIREMENTS FOR 
                   LONGSTANDING, FULLY FUNDED TYPE III SUPPORTING 
                   ORGANIZATIONS.

       (a) Holdings Requirements.--Subsection (f) of section 4943 
     is amended by adding at the end the following new paragraph:
       ``(8) Exception for certain longstanding fully funded type 
     iii supporting organizations.--Paragraph (1) shall not apply 
     to any organization if--
       ``(A) the organization was established before January 1, 
     1970,
       ``(B) the organization has not accepted any substantial 
     contributions after December 31, 1970,
       ``(C) no donor to the organization was alive on August 17, 
     2006, and
       ``(D) no family member (within the meaning of section 
     4958(f)(4)) of any donor is an organization manager (as 
     defined in section 4958(f)(2)).''.
       (b) Payout Requirements.--Section 1241(d)(1) of the Pension 
     Protection Act of 2006 shall not apply to any organization 
     described in section 4943(f)(8) of the Internal Revenue Code 
     of 1986, as added by this section.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 7. CONTRIBUTIONS BY INDIAN TRIBAL GOVERNMENTS TREATED 
                   SAME AS CONTRIBUTIONS BY STATES.

       (a) In General.--Section 7871(a) (relating to Indian tribal 
     governments treated as States for certain purposes) is 
     amended by striking ``and'' at the end of paragraph (6), by 
     striking the period at the end of paragraph (7) and inserting 
     ``; and'', and by adding at the end the following new 
     paragraph:
       ``(8) for purposes of--
       ``(A) determining support of an organization described in 
     section 170(b)(1)(A)(vi), and
       ``(B) determining whether an organization is described in 
     paragraph (1) or (2) of section 509(a) for purposes of 
     section 509(a)(3).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to--
       (1) support received on or after the date of the enactment 
     of this Act, and
       (2) the determination of the status of any organization 
     with respect to any taxable year beginning after such date of 
     enactment.

     SEC. 8. ELECTRONIC FILING OF EXEMPT ORGANIZATION ANNUAL 
                   RETURNS.

       (a) In General.--Subsection (d) of section 6104 (relating 
     to public inspection of certain annual returns, reports, 
     applications for exemption, and notices of status) is 
     amended--
       (1) by redesignating the paragraph relating to disclosure 
     of reports by Internal Revenue Service as paragraph (7),
       (2) by redesignating the paragraph relating to application 
     to nonexempt charitable trusts and nonexempt private 
     foundations as paragraph (8), and
       (3) by adding at the end the following new paragraph:
       ``(9) Returns required on magnetic media, etc.--Any 
     organization (other than an organization exempt from tax 
     under section 527(a)) which--
       ``(A) is required to make available information for 
     inspection under paragraph (1)(A), and
       ``(B) would be required to file returns on magnetic media 
     or in other machine-readable form under subsection (e) of 
     section 6011 if such subsection were applied by substituting 
     `at least 5 returns' for `at least 250 returns' in paragraph 
     (2)(A) thereof,

     shall file the information referred to in clauses (i) and 
     (ii) of paragraph (1)(A) on such magnetic media or in other 
     machine-readable form.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to returns required to be filed for taxable years 
     beginning after the date of the enactment of this Act.

     SEC. 9. EXPANSION OF BAD CHECK PENALTY TO ELECTRONIC 
                   PAYMENTS, ETC.

       (a) In General.--Section 6657 (relating to bad checks) is 
     amended by adding at the end the following: ``Except as 
     otherwise provided by the Secretary, any authorization of a 
     payment by commercially acceptable means (within the meaning 
     of section 6311) shall be treated for purposes of this 
     section in the same manner as a check.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to authorizations of payments made after December 
     31, 2005.

  The SPEAKER pro tempore (Mr. Altmire). Pursuant to the rule, the 
gentleman from Georgia (Mr. Lewis) and the gentleman from Minnesota 
(Mr. Ramstad) each will control 20 minutes.
  The Chair recognizes the gentleman from Georgia.


                             General Leave

  Mr. LEWIS of Georgia. Mr. Speaker, I ask unanimous consent that 
Members may have 5 legislative days to revise and extend their remarks 
on the bill, H.R. 7083.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Georgia?
  There was no objection.
  Mr. LEWIS of Georgia. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of H.R. 7083, the Charity Enhancement 
Act of 2008.
  This bill responds to hundreds of pages of written comments that were 
submitted by charities to the Ways and Means Subcommittee on Oversight. 
This bill contains a number of important provisions to help charities 
continue their good work.
  Charities play such an important role in our country. Charities and 
foundations make up the very fabric of our communities. They know the 
deepest human needs of our friends and neighbors, and they know the 
solutions that work. Often, at critical times, charities and 
foundations are the leaders that show government the way to care for 
our citizens. Their services touch every corner of life in our 
communities--education, the arts, and medical research.
  They also serve those who need our help the most by feeding the 
hungry, caring for the sick and lifting up those who live in poverty. 
This bill fixes some of the unintended effects of new charitable laws 
that keep them from doing their good and necessary work.
  First, the bill will promote scholarships by relaxing the rules 
imposed on certain scholarship funds.
  Second, the bill would improve disclosure to the public by increasing 
the electronic filing of tax returns filed by charities and 
foundations.
  Third, the bill will provide relief to certain longstanding 
supporting organizations created before 1970. Notably,

[[Page 22747]]

these are charities where the donors are deceased, so there is no 
concern about misusing the charity for personal gain.
  Historically, these charities have distributed significant amounts to 
their communities over the past 38 years. Their contributions have been 
used to fund scholarship and support charitable, scientific, and 
educational activities.
  Finally, this bill will allow charities to reimburse reasonable and 
necessary expenses of volunteer board members.
  I urge my colleagues on both sides of the aisle to support our 
charities and foundations and vote ``yes'' for H.R. 7083.
  I reserve the balance of my time.
  Mr. RAMSTAD. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, tough economic times are especially tough for America's 
charitable community. They face increasing demands for services from 
people in need, and the investments that foundations make in order to 
grow their endowments have eroded significantly due to market turmoil.
  Last year on behalf of the Ways and Means Oversight Subcommittee, 
Chairman Lewis requested comments on the implementation of charitable 
reforms contained in the 2006 Pension Protection Act.
  The bill before us responds to many of the concerns that were raised 
by the charitable community. Specifically, the bill has seven 
provisions aimed at relieving burdens on charities and on foundations:
  Funds advised by certain public charities and government entities 
would not be treated as donor advised funds.
  Certain scholarships given from donor advised funds would not be 
considered a taxable distribution.
  Thirdly, a special written acknowledgment requirement for charitable 
contributions to donor advised funds would be repealed.
  Fourth, supporting organizations would be allowed to pay reasonable 
compensation to substantial contributors for the services that they 
perform without the payment being considered an excess benefit.
  Also, certain long-standing Type III organizations with no recent 
major or living donors would be exempt from payout and excess business 
holding requirements.
  In addition, Mr. Speaker, contributions from Indian tribal 
governments would be treated the same as contributions from States for 
purposes of determining whether an organization is a public charity or 
a private foundation.
  Finally, the IRS would be allowed to institute electronic filing for 
charities that file at least five information returns each year.
  Mr. Speaker, I am proud to cosponsor Chairman Lewis' legislation, 
grateful for his leadership of the Oversight Subcommittee and his 
friendship over the years. His leadership as chairman of our 
subcommittee has been thoughtful and bipartisan inclusive. For that I 
am very grateful. I urge my colleagues to support H.R. 7083, the 
Charity Enhancement Act to provide relief to America's charitable 
community.
  I reserve the balance of my time.
  Mr. LEWIS of Georgia. Mr. Speaker, I am pleased to yield 3 minutes to 
the gentleman from California (Mr. Thompson), a member of the Ways and 
Means Committee.
  Mr. THOMPSON of California. Mr. Speaker, I would like to thank Mr. 
Lewis and Mr. Ramstad for their work on this very important bill, a 
bill that I am proud to be the coauthor of, and I rise today in strong 
support of this bill.
  The provisions of this bill will play a vital role in allowing 
charitable organizations to better serve our communities. In fact, the 
two largest organizations representing charities, Independent Sector 
and the Council on Foundations, have both endorsed this critical 
legislation because it allows charities to better fulfill their 
valuable mission.
  To help explain the practical impact of this bill, I would like to 
share the story of the Doyle Trust which benefits thousands of 
hardworking families.
  Doyle Trust was founded 59 years ago to serve the students of Santa 
Rosa Junior College in Sonoma County, California. On Frank Doyle's 
death, he established the Doyle Trust which he funded with his 51 
percent share in the Exchange Bank. Doyle created his trust so that 
dividends for his bank stock would go to a scholarship fund to help 
students attending this junior college.
  Last year alone, more than $5 million in scholarships for 5,500 Santa 
Rosa Junior College students was donated by the Doyle Trust. It is not 
unusual to find three generations of the same family who have benefited 
from the Doyle Trust scholarships. The Doyle Trust is an institution in 
Sonoma County, and its contribution to the community makes a real 
difference in the lives of working families.
  Without this legislation, the mission of the Doyle Trust may be 
undermined because provisions of the Pension Protection Act could force 
the trust to sell its assets.

                              {time}  1445

  The unintended consequence of the Pension Protection Act would be to 
end Doyle Trust's ability to continue providing scholarships to 
thousands of students at Santa Rosa Junior College.
  I urge my colleagues on both sides of the aisle to help us pass this 
bill to ensure that future generations of Sonoma County families can 
benefit from the generosity of the Doyle Trust.
  Mr. RAMSTAD. Mr. Speaker, I continue to reserve the balance of my 
time.
  Mr. LEWIS of Georgia. Mr. Speaker, I am pleased to yield 3 minutes to 
the gentleman from California (Mr. Becerra).
  Mr. BECERRA. Mr. Speaker, I thank the chairman, Mr. Lewis, and the 
ranking member, Mr. Ramstad, for this work that is now embodied in H.R. 
7083. I support the legislation, and thank them for their efforts to 
move forward on what is a very important subject, and that is 
encouraging Americans to participate in charitable giving.
  The government has a partnership with the charitable sector. The 
government relies on charities to reach out to populations in need, and 
that is why the charitable sector receives tax-preferred treatment. We 
want to incent charitable activity as much as we can because 
government, by itself, cannot serve the needs of all of those Americans 
who work very hard but who sometimes fall upon bad times.
  At the same time, we find that there are some charitable 
organizations that are doing tremendous work while others are not, and 
I believe this is the beginning of a major effort on the part of 
Congress to try to really focus our attention on the charitable sector 
to make sure that we are receiving everything Americans expect through 
that tax-deferred treatment that these charities and nonprofit 
organizations receive.
  One example in this bill of how we are doing good is through the 
tribal charities provision in this legislation. Tribal charities, 
charities that are within the jurisdiction of the tribal governments of 
this country, are a good example of nonprofits that recognize the 
overwhelming need of a people, in this case, people in Indian country. 
Tribal charities play a crucial role in serving the needs of members of 
these many tribes throughout America.
  We know that close to 25 percent of Native Americans today live in 
poverty. It's even higher for Native American children. Some 31 percent 
live in households that live in poverty. That compares to 11 percent of 
American children who are non-Native American. We also know that close 
to 20 percent of Native American seniors today still live in poverty, 
far greater than we see outside of Indian country. Fewer than 15 
percent of Native Americans today go on to receive a bachelor's degree 
or higher. We need to change that.
  So these tribal charities that we find are making every effort to try 
to reach out to communities throughout Indian country to make it 
possible for young kids, for adults who work and for seniors to have a 
chance to benefit from all we can.
  Tribal charities under this legislation will be treated the way any 
other State government or local government is treated when it comes to 
dealing with charities, the same type of tax treatment. That will give 
tribes an opportunity to really enhance the ability

[[Page 22748]]

of tribal charities to do the most good for a larger population. This 
legislation will go a long way in correcting some of the mistakes that 
we've made and in correcting some of the omissions that have been there 
in the past.
  Once again, I believe, as I said before, that under the leadership of 
Chairman Lewis and with the good help of Mr. Ramstad that we're moving 
forward to make sure that we have a charitable tax deduction that works 
for everyone and that is optimal in its efforts to try to do public 
good.
  Mr. RAMSTAD. Mr. Speaker, I continue to reserve the balance of my 
time.
  Mr. LEWIS of Georgia. Mr. Speaker, may I inquire of Mr. Ramstad 
whether he has any additional speakers?
  Mr. RAMSTAD. Mr. Speaker, I have no further speakers. I yield back 
the balance of my time.
  Mr. LEWIS of Georgia. Mr. Speaker, this is an important bill, and I 
want to thank my good friend Mr. Ramstad for all of his hard work and 
for his great work in helping to bring this needed bill before us 
today.
  Given the terrible state of the economy, we need to do all we can to 
support our charities. We need to promote scholarships, to promote 
charitable giving and to enhance public disclosure.
  I fully support H.R. 7083. I urge all of my colleagues on both sides 
of the aisle to support our charities and to vote ``yes'' for the bill.
  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 Georgia (Mr. Lewis) that the House suspend the rules and 
pass the bill, H.R. 7083.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

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