[House Report 107-144]
[From the U.S. Government Publishing Office]



107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    107-144

======================================================================



 
 PROVIDING FOR CONSIDERATION OF H.R. 7, THE COMMUNITY SOLUTIONS ACT OF 
                                  2001

                                _______
                                

   July 17, 2001.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

Ms. Pryce of Ohio, from the Committee on Rules, submitted the following

                              R E P O R T

                       [To accompany H. Res. 196]

    The Committee on Rules, having had under consideration 
House Resolution 196, by a nonrecord vote, report the same to 
the House with the recommendation that the resolution be 
adopted.

                summary of provisions of the resolution

    The resolution provides for the consideration in the House 
of H.R. 7, the Community Solutions Act of 2001, under a 
modified closed rule. The rule provides one hour of debate 
equally divided and controlled by the chairman and ranking 
minority member of the Committee on Ways and Means. The rule 
waives all points of order against consideration of the bill.
    The rule provides that, in lieu of the amendments 
recommended by the Committee on Ways and Means and the 
Committee on the Judiciary now printed in the bill, the 
amendment in the nature of a substitute printed in the 
Congressional Record and numbered one shall be considered as 
adopted.
    The rule provides for consideration of the amendment in the 
nature of a substitute printed in this report, if offered by 
Representative Rangel or Representative Conyers or a designee, 
which shall be considered as read and shall be separately 
debatable for one hour equally divided and controlled by the 
proponent and an opponent. The rule waives all points of order 
against the amendment. Finally, the rule provides one motion to 
recommit with or without instructions.

                            COMMITTEE VOTES

    Pursuant to clause 3(b) of House rule XIII the results of 
each record vote on an amendment or motion to report, together 
with the names of those voting for and against, are printed 
below:

Rules Committee Record Vote No. 26

    Date: July 17, 2001.
    Measure: H.R. 7, the Community Solutions Act of 2001.
    Motion By: Mr. Frost.
    Summary of Motion: Make in order the Foley amendment to 
ensure that organizations receiving federal funds to subsidize 
the operation of a faith-based assistance program would not be 
permitted to exempt themselves from State and local civil 
rights laws.
    Results: Defeated 4 to 9.
    Vote by Member: Goss--Nay; Linder--Nay; Pryce--Yea; Diaz-
Balart--Nay; Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; 
Reynolds--Nay; Frost--Yea; Hall--Nay; Slaughter--Yea; Hastings 
(FL)--Yea; Dreier--Nay.

Rules Committee Record Vote No. 27

    Date: July 17, 2001.
    Measure: H.R. 7, the Community Solutions Act of 2001.
    Motion By: Mr. Frost.
    Summary of Motion: Make in order the Edwards amendment to 
prohibit direct federal funding of pervasively sectarian 
organizations.
    Results: Defeated 3 to 10.
    Vote by Member: Goss--Nay; Linder--Nay; Pryce--Nay; Diaz-
Balart--Nay; Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; 
Reynolds--Nay; Frost--Yea; Hall--Nay; Slaughter--Yea; Hastings 
(FL)--Yea; Dreier--Nay.

Rules Committee Record Vote No. 28

    Date: July 17, 2001.
    Measure: H.R. 7, the Community Solutions Act of 2001.
    Motion By: Mr. Hastings (FL).
    Summary of Motion: Make in order the Thurman amendment to 
provide that the tax provisions in the bill would not apply if 
the Director of OMB projects that there will be a federal 
deficit outside the Social Security and Medicare Trust Funds.
    Results: Defeated 3 to 10.
    Vote by Member: Goss--Nay; Linder--Nay; Pryce--Nay; Diaz-
Balart--Nay; Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; 
Reynolds--Nay; Frost--Yea; Hall--Nay; Slaughter--Yea; Hastings 
(FL)--Yea; Dreier--Nay.

 summary of amendment made in order to h.r. 7--community solutions act 
                                of 2001

    Rangel/Conyers/Frank/Nadler/Edwards/Scott: Democratic 
Substitute. Retains all of the provisions of the bill as 
reported with the following changes: revises section 1991(e) in 
section 201 to make clear that religious organizations 
receiving taxpayer dollars for charitable choice programs 
cannot discriminate in employment on the basis of an employee's 
religion, religious belief, or a refusal to hold a religious 
belief, adds a new section (i) to section 1991 in section 201 
to prohibit the charitable choice provisions in the bill from 
preempting or superceding state or local civil rights laws; 
revises sections 1991(j) of section 201 to make clear that 
religious programs cannot engage in sectarian instruction, 
worship, or proselytization at the same time and place as the 
government funded program; deletes the indirect assistance 
provision; deletes the tort liability reform provisions; and 
includes a revenue offset that reduces the recent tax cut for 
the top income rate by 0.2 percentage points to offset the cost 
of the tax benefits included in Title I.
    Text of amendment made in order under the rule:

  An Amendment To Be Offered by Representative Rangel of New York, or 
  Representative Conyers of Michigan, or a Designee, Debatable for 60 
                                Minutes

  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Community 
Solutions Act of 2001''.
  (b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title; table of contents.

              TITLE I--CHARITABLE GIVING INCENTIVES PACKAGE

Sec. 101. Deduction for portion of charitable contributions to be 
          allowed to individuals who do not itemize deductions.
Sec. 102. Tax-free distributions from individual retirement accounts for 
          charitable purposes.
Sec. 103. Increase in cap on corporate charitable contributions.
Sec. 104. Charitable deduction for contributions of food inventory.
Sec. 105. Reform of excise tax on net investment income of private 
          foundations.
Sec. 106. Excise tax on unrelated business taxable income of charitable 
          remainder trusts.
Sec. 107. Expansion of charitable contribution allowed for scientific 
          property used for research and for computer technology and 
          equipment used for educational purposes.
Sec. 108. Adjustment to basis of S corporation stock for certain 
          charitable contributions.
Sec. 109. Revenue offset.

                TITLE II--EXPANSION OF CHARITABLE CHOICE

Sec. 201. Provision of assistance under government programs by religious 
          and community organizations.

               TITLE III--INDIVIDUAL DEVELOPMENT ACCOUNTS

Sec. 301. Additional qualified entities eligible to conduct projects 
          under the Assets for Independence Act.
Sec. 302. Increase in limitation on net worth.
Sec. 303. Change in limitation on deposits for an individual.
Sec. 304. Elimination of limitation on deposits for a household.
Sec. 305. Extension of program.
Sec. 306. Conforming amendments.
Sec. 307. Applicability.

             TITLE I--CHARITABLE GIVING INCENTIVES PACKAGE

SEC. 101. DEDUCTION FOR PORTION OF CHARITABLE CONTRIBUTIONS TO BE 
                    ALLOWED TO INDIVIDUALS WHO DO NOT ITEMIZE 
                    DEDUCTIONS.

  (a) In General.--Section 170 of the Internal Revenue Code of 
1986 (relating to charitable, etc., contributions and gifts) is 
amended by redesignating subsection (m) as subsection (n) and 
by inserting after subsection (l) the following new subsection:
  ``(m) Deduction for Individuals Not Itemizing Deductions.--
          ``(1) In general.--In the case of an individual who 
        does not itemize his deductions for the taxable year, 
        there shall be taken into account as a direct 
        charitable deduction under section 63 an amount equal 
        to the lesser of--
                  ``(A) the amount allowable under subsection 
                (a) for the taxable year for cash 
                contributions, or
                  ``(B) the applicable amount.
          ``(2) Applicable amount.--For purposes of paragraph 
        (1), the applicable amount shall be determined as 
        follows:

        ``For taxable years                               The applicable
          beginning in:                                     amount is:  
            2002 and 2003.....................................      $25 
            2004, 2005, 2006..................................      $50 
            2007, 2008, 2009..................................      $75 
            2010 and thereafter...............................     $100.

        In the case of a joint return, the applicable amount is 
        twice the applicable amount determined under the 
        preceding table.''.
  (b) Direct Charitable Deduction.--
          (1) In general.--Subsection (b) of section 63 of such 
        Code is amended by striking ``and'' at the end of 
        paragraph (1), by striking the period at the end of 
        paragraph (2) and inserting ``, and'', and by adding at 
        the end thereof the following new paragraph:
          ``(3) the direct charitable deduction.''.
          (2) Definition.--Section 63 of such Code is amended 
        by redesignating subsection (g) as subsection (h) and 
        by inserting after subsection (f) the following new 
        subsection:
  ``(g) Direct Charitable Deduction.--For purposes of this 
section, the term `direct charitable deduction' means that 
portion of the amount allowable under section 170(a) which is 
taken as a direct charitable deduction for the taxable year 
under section 170(m).''.
          (3) Conforming amendment.--Subsection (d) of section 
        63 of such Code is amended by striking ``and'' at the 
        end of paragraph (1), by striking the period at the end 
        of paragraph (2) and inserting ``, and'', and by adding 
        at the end thereof the following new paragraph:
          ``(3) the direct charitable deduction.''.
  (c) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 2001.

SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS 
                    FOR CHARITABLE PURPOSES.

  (a) In General.--Subsection (d) of section 408 of the 
Internal Revenue Code of 1986 (relating to individual 
retirement accounts) is amended by adding at the end the 
following new paragraph:
          ``(8) Distributions for charitable purposes.--
                  ``(A) In general.--No amount shall be 
                includible in gross income by reason of a 
                qualified charitable distribution.
                  ``(B) Qualified charitable distribution.--For 
                purposes of this paragraph, the term `qualified 
                charitable distribution' means any distribution 
                from an individual retirement account--
                          ``(i) which is made on or after the 
                        date that the individual for whose 
                        benefit the account is maintained has 
                        attained age 70\1/2\, and
                          ``(ii) which is made directly by the 
                        trustee--
                                  ``(I) to an organization 
                                described in section 170(c), or
                                  ``(II) to a split-interest 
                                entity.
                A distribution shall be treated as a qualified 
                charitable distribution only to the extent that 
                the distribution would be includible in gross 
                income without regard to subparagraph (A) and, 
                in the case of a distribution to a split-
                interest entity, only if no person holds an 
                income interest in the amounts in the split-
                interest entity attributable to such 
                distribution other than one or more of the 
                following: the individual for whose benefit 
                such account is maintained, the spouse of such 
                individual, or any organization described in 
                section 170(c).
                  ``(C) Contributions must be otherwise 
                deductible.--For purposes of this paragraph--
                          ``(i) Direct contributions.--A 
                        distribution to an organization 
                        described in section 170(c) shall be 
                        treated as a qualified charitable 
                        distribution only if a deduction for 
                        the entire distribution would be 
                        allowable under section 170 (determined 
                        without regard to subsection (b) 
                        thereof and this paragraph).
                          ``(ii) Split-interest gifts.--A 
                        distribution to a split-interest entity 
                        shall be treated as a qualified 
                        charitable distribution only if a 
                        deduction for the entire value of the 
                        interest in the distribution for the 
                        use of an organization described in 
                        section 170(c) would be allowable under 
                        section 170 (determined without regard 
                        to subsection (b) thereof and this 
                        paragraph).
                  ``(D) Application of section 72.--
                Notwithstanding section 72, in determining the 
                extent to which a distribution is a qualified 
                charitable distribution, the entire amount of 
                the distribution shall be treated as includible 
                in gross income without regard to subparagraph 
                (A) to the extent that such amount does not 
                exceed the aggregate amount which would be so 
                includible if all amounts were distributed from 
                all individual retirement accounts otherwise 
                taken into account in determining the inclusion 
                on such distribution under section 72. Proper 
                adjustments shall be made in applying section 
                72 to other distributions in such taxable year 
                and subsequent taxable years.
                  ``(E) Special rules for split-interest 
                entities.--
                          ``(i) Charitable remainder trusts.--
                        Distributions made from an individual 
                        retirement account to a trust described 
                        in subparagraph (G)(ii)(I) shall be 
                        treated as income described in section 
                        664(b)(1) except to the extent that the 
                        beneficiary of the individual 
                        retirement account notifies the trustee 
                        of the trust of the amount which is not 
                        allocable to income under subparagraph 
                        (D).
                          ``(ii) Pooled income funds.--No 
                        amount shall be includible in the gross 
                        income of a pooled income fund (as 
                        defined in subparagraph (G)(ii)(II)) by 
                        reason of a qualified charitable 
                        distribution to such fund.
                          ``(iii) Charitable gift annuities.--
                        Qualified charitable distributions made 
                        for a charitable gift annuity shall not 
                        be treated as an investment in the 
                        contract.
                  ``(F) Denial of deduction.--Qualified 
                charitable distributions shall not be taken 
                into account in determining the deduction under 
                section 170.
                  ``(G) Split-interest entity defined.--For 
                purposes of this paragraph, the term `split-
                interest entity' means--
                          ``(i) a charitable remainder annuity 
                        trust or a charitable remainder 
                        unitrust (as such terms are defined in 
                        section 664(d)),
                          ``(ii) a pooled income fund (as 
                        defined in section 642(c)(5)), and
                          ``(iii) a charitable gift annuity (as 
                        defined in section 501(m)(5)).''.
  (b) Modifications Relating to Information Returns by Certain 
Trusts.--
          (1) Returns.--Section 6034 of such Code (relating to 
        returns by trusts described in section 4947(a)(2) or 
        claiming charitable deductions under section 642(c)) is 
        amended to read as follows:

``SEC. 6034. RETURNS BY TRUSTS DESCRIBED IN SECTION 4947(A)(2) OR 
                    CLAIMING CHARITABLE DEDUCTIONS UNDER SECTION 
                    642(C).

  ``(a) Trusts Described in Section 4947(a)(2).--Every trust 
described in section 4947(a)(2) shall furnish such information 
with respect to the taxable year as the Secretary may by forms 
or regulations require.
  ``(b) Trusts Claiming a Charitable Deduction Under Section 
642(c).--
          ``(1) In general.--Every trust not required to file a 
        return under subsection (a) but claiming a charitable, 
        etc., deduction under section 642(c) for the taxable 
        year shall furnish such information with respect to 
        such taxable year as the Secretary may by forms or 
        regulations prescribe, including:
                  ``(A) the amount of the charitable, etc., 
                deduction taken under section 642(c) within 
                such year,
                  ``(B) the amount paid out within such year 
                which represents amounts for which charitable, 
                etc., deductions under section 642(c) have been 
                taken in prior years,
                  ``(C) the amount for which charitable, etc., 
                deductions have been taken in prior years but 
                which has not been paid out at the beginning of 
                such year,
                  ``(D) the amount paid out of principal in the 
                current and prior years for charitable, etc., 
                purposes,
                  ``(E) the total income of the trust within 
                such year and the expenses attributable 
                thereto, and
                  ``(F) a balance sheet showing the assets, 
                liabilities, and net worth of the trust as of 
                the beginning of such year.
          ``(2) Exceptions.--Paragraph (1) shall not apply in 
        the case of a taxable year if all the net income for 
        such year, determined under the applicable principles 
        of the law of trusts, is required to be distributed 
        currently to the beneficiaries. Paragraph (1) shall not 
        apply in the case of a trust described in section 
        4947(a)(1).''.
          (2) Increase in penalty relating to filing of 
        information return by split-interest trusts.--Paragraph 
        (2) of section 6652(c) of such Code (relating to 
        returns by exempt organizations and by certain trusts) 
        is amended by adding at the end the following new 
        subparagraph:
                  ``(C) Split-interest trusts.--In the case of 
                a trust which is required to file a return 
                under section 6034(a), subparagraphs (A) and 
                (B) of this paragraph shall not apply and 
                paragraph (1) shall apply in the same manner as 
                if such return were required under section 
                6033, except that--
                          ``(i) the 5 percent limitation in the 
                        second sentence of paragraph (1)(A) 
                        shall not apply,
                          ``(ii) in the case of any trust with 
                        gross income in excess of $250,000, the 
                        first sentence of paragraph (1)(A) 
                        shall be applied by substituting `$100' 
                        for `$20', and the second sentence 
                        thereof shall be applied by 
                        substituting `$50,000' for `$10,000', 
                        and
                          ``(iii) the third sentence of 
                        paragraph (1)(A) shall be disregarded.
                If the person required to file such return 
                knowingly fails to file the return, such person 
                shall be personally liable for the penalty 
                imposed pursuant to this subparagraph.''.
          (3) Confidentiality of noncharitable beneficiaries.--
        Subsection (b) of section 6104 of such Code (relating 
        to inspection of annual information returns) is amended 
        by adding at the end the following new sentence: ``In 
        the case of a trust which is required to file a return 
        under section 6034(a), this subsection shall not apply 
        to information regarding beneficiaries which are not 
        organizations described in section 170(c).''.
  (c) Effective Dates.--
          (1) Subsection (a).--The amendment made by subsection 
        (a) shall apply to taxable years beginning after 
        December 31, 2001.
          (2) Subsection (b).--The amendments made by 
        subsection (b) shall apply to returns for taxable years 
        beginning after December 31, 2001.

SEC. 103. INCREASE IN CAP ON CORPORATE CHARITABLE CONTRIBUTIONS.

  (a) In General.--Paragraph (2) of section 170(b) of the 
Internal Revenue Code of 1986 (relating to corporations) is 
amended by striking ``10 percent'' and inserting ``the 
applicable percentage''.
  (b) Applicable Percentage.--Subsection (b) of section 170 of 
such Code is amended by adding at the end the following new 
paragraph:
          ``(3) Applicable percentage defined.--For purposes of 
        paragraph (2), the applicable percentage shall be 
        determined in accordance with the following table:

        ``For taxable years beginning                     The applicable
          in calendar year--                             percentage is--
            2002 through 2007.................................       11 
            2008..............................................       12 
            2009..............................................       13 
            2010 and thereafter...............................    15.''.

  (c) Conforming Amendments.--
          (1) Sections 512(b)(10) and 805(b)(2)(A) of such Code 
        are each amended by striking ``10 percent'' each place 
        it occurs and inserting ``the applicable percentage 
        (determined under section 170(b)(3))''.
          (2) Sections 545(b)(2) and 556(b)(2) of such Code are 
        each amended by striking ``10-percent limitation'' and 
        inserting ``applicable percentage limitation''.
  (d) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 2001.

SEC. 104. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD INVENTORY.

  (a) In General.--Paragraph (3) of section 170(e) of the 
Internal Revenue Code of 1986 (relating to special rule for 
certain contributions of inventory and other property) is 
amended by redesignating subparagraph (C) as subparagraph (D) 
and by inserting after subparagraph (B) the following new 
subparagraph:
                  ``(C) Special rule for contributions of food 
                inventory.--
                          ``(i) General rule.--In the case of a 
                        charitable contribution of food, this 
                        paragraph shall be applied--
                                  ``(I) without regard to 
                                whether the contribution is 
                                made by a C corporation, and
                                  ``(II) only for food that is 
                                apparently wholesome food.
                          ``(ii) Determination of fair market 
                        value.--In the case of a qualified 
                        contribution of apparently wholesome 
                        food to which this paragraph applies 
                        and which, solely by reason of internal 
                        standards of the taxpayer or lack of 
                        market, cannot or will not be sold, the 
                        fair market value of such food shall be 
                        determined by taking into account the 
                        price at which the same or similar food 
                        items are sold by the taxpayer at the 
                        time of the contribution (or, if not so 
                        sold at such time, in the recent past).
                          ``(iii) Apparently wholesome food.--
                        For purposes of this subparagraph, the 
                        term `apparently wholesome food' shall 
                        have the meaning given to such term by 
                        section 22(b)(2) of the Bill Emerson 
                        Good Samaritan Food Donation Act (42 
                        U.S.C. 1791(b)(2)), as in effect on the 
                        date of the enactment of this 
                        subparagraph.''.
  (b) Effective Date.--The amendment made by subsection (a) 
shall apply to taxable years beginning after December 31, 2001.

SEC. 105. REFORM OF EXCISE TAX ON NET INVESTMENT INCOME OF PRIVATE 
                    FOUNDATIONS.

  (a) In General.--Subsection (a) of section 4940 of the 
Internal Revenue Code of 1986 (relating to excise tax based on 
investment income) is amended by striking ``2 percent'' and 
inserting ``1 percent''.
  (b) Repeal of Reduction In Tax Where Private Foundation Meets 
Certain Distribution Requirements.--Section 4940 of such Code 
is amended by striking subsection (e).
  (c) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 2001.

SEC. 106. EXCISE TAX ON UNRELATED BUSINESS TAXABLE INCOME OF CHARITABLE 
                    REMAINDER TRUSTS.

  (a) In General.--Subsection (c) of section 664 of the 
Internal Revenue Code of 1986 (relating to exemption from 
income taxes) is amended to read as follows:
  ``(c) Taxation of Trusts.--
          ``(1) Income tax.--A charitable remainder annuity 
        trust and a charitable remainder unitrust shall, for 
        any taxable year, not be subject to any tax imposed by 
        this subtitle.
          ``(2) Excise tax.--
                  ``(A) In general.--In the case of a 
                charitable remainder annuity trust or a 
                charitable remainder unitrust that has 
                unrelated business taxable income (within the 
                meaning of section 512, determined as if part 
                III of subchapter F applied to such trust) for 
                a taxable year, there is hereby imposed on such 
                trust or unitrust an excise tax equal to the 
                amount of such unrelated business taxable 
                income.
                  ``(B) Certain rules to apply.--The tax 
                imposed by subparagraph (A) shall be treated as 
                imposed by chapter 42 for purposes of this 
                title other than subchapter E of chapter 42.
                  ``(C) Character of distributions and 
                coordination with distribution requirements.--
                The amounts taken into account in determining 
                unrelated business taxable income (as defined 
                in subparagraph (A)) shall not be taken into 
                account for purposes of--
                          ``(i) subsection (b),
                          ``(ii) determining the value of trust 
                        assets under subsection (d)(2), and
                          ``(iii) determining income under 
                        subsection (d)(3).
                  ``(D) Tax court proceedings.--For purposes of 
                this paragraph, the references in section 
                6212(c)(1) to section 4940 shall be deemed to 
                include references to this paragraph.''.
  (b) Effective Date.--The amendment made by subsection (a) 
shall apply to taxable years beginning after December 31, 2001.

SEC. 107. EXPANSION OF CHARITABLE CONTRIBUTION ALLOWED FOR SCIENTIFIC 
                    PROPERTY USED FOR RESEARCH AND FOR COMPUTER 
                    TECHNOLOGY AND EQUIPMENT USED FOR EDUCATIONAL 
                    PURPOSES.

  (a) Scientific Property Used for Research.--Clause (ii) of 
section 170(e)(4)(B) of the Internal Revenue Code of 1986 
(defining qualified research contributions) is amended by 
inserting ``or assembled'' after ``constructed''.
  (b) Computer Technology and Equipment for Educational 
Purposes.--Clause (ii) of section 170(e)(6)(B) of such Code is 
amended by inserting ``or assembled'' after ``constructed'' and 
``or assembling'' after ``construction''.
  (c) Conforming Amendment.--Subparagraph (D) of section 
170(e)(6) of such Code is amended by inserting ``or assembled'' 
after ``constructed'' and ``or assembling'' after 
``construction''.
  (d) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 2001.

SEC. 108. ADJUSTMENT TO BASIS OF S CORPORATION STOCK FOR CERTAIN 
                    CHARITABLE CONTRIBUTIONS.

  (a) In General.--Paragraph (1) of section 1367(a) of such 
Code (relating to adjustments to basis of stock of 
shareholders, etc.) is amended by striking ``and'' at the end 
of subparagraph (B), by striking the period at the end of 
subparagraph (C) and inserting ``, and'', and by adding at the 
end the following new subparagraph:
                  ``(D) the excess of the amount of the 
                shareholder's deduction for any charitable 
                contribution made by the S corporation over the 
                shareholder's proportionate share of the 
                adjusted basis of the property contributed.''.
  (b) Effective Date.--The amendment made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 109. REVENUE OFFSET.

  (a) In General.--Paragraph (2) of section 1(i) of the 
Internal Revenue Code of 1986 (relating to reductions in rates 
after June 30, 2001) is amended--
          (1) by striking ``38.6'' and inserting ``38.8'',
          (2) by striking ``37.6'' and inserting ``37.8'', and
          (3) by striking ``35'' and inserting ``35.5''.
  (b) Effective Date.--The amendments made by subsection (a) 
shall apply to taxable years beginning after December 31, 2001.

                TITLE II--EXPANSION OF CHARITABLE CHOICE

SEC. 201. PROVISION OF ASSISTANCE UNDER GOVERNMENT PROGRAMS BY 
                    RELIGIOUS AND COMMUNITY ORGANIZATIONS.

  Title XXIV of the Revised Statutes of the United States is 
amended by inserting after section 1990 (42 U.S.C. 1994) the 
following:

``SEC. 1991. CHARITABLE CHOICE.

  ``(a) Short Title.--This section may be cited as the 
`Charitable Choice Act of 2001'.
  ``(b) Purposes.--The purposes of this section are--
          ``(1) to enable assistance to be provided to 
        individuals and families in need in the most effective 
        and efficient manner;
          ``(2) to supplement the Nation's social service 
        capacity by facilitating the entry of new, and the 
        expansion of existing, efforts by religious and other 
        community organizations in the administration and 
        distribution of government assistance under the 
        government programs described in subsection (c)(4);
          ``(3) to prohibit discrimination against religious 
        organizations on the basis of religion in the 
        administration and distribution of government 
        assistance under such programs;
          ``(4) to allow religious organizations to participate 
        in the administration and distribution of such 
        assistance without impairing the religious character 
        and autonomy of such organizations; and
          ``(5) to protect the religious freedom of individuals 
        and families in need who are eligible for government 
        assistance, including expanding the possibility of 
        their being able to choose to receive services from a 
        religious organization providing such assistance.
  ``(c) Religious Organizations Included as Providers; 
Disclaimers.--
          ``(1) In general.--
                  ``(A) Inclusion.--For any program described 
                in paragraph (4) that is carried out by the 
                Federal Government, or by a State or local 
                government with Federal funds, the government 
                shall consider, on the same basis as other 
                nongovernmental organizations, religious 
                organizations to provide the assistance under 
                the program, and the program shall be 
                implemented in a manner that is consistent with 
                the establishment clause and the free exercise 
                clause of the first amendment to the 
                Constitution.
                  ``(B) Discrimination prohibited.--Neither the 
                Federal Government, nor a State or local 
                government receiving funds under a program 
                described in paragraph (4), shall discriminate 
                against an organization that provides 
                assistance under, or applies to provide 
                assistance under, such program on the basis 
                that the organization is religious or has a 
                religious character.
          ``(2) Funds not aid to religion.--Federal, State, or 
        local government funds or other assistance that is 
        received by a religious organization for the provision 
        of services under this section constitutes aid to 
        individuals and families in need, the ultimate 
        beneficiaries of such services, and not support for 
        religion or the organization's religious beliefs or 
        practices. Notwithstanding the provisions in this 
        paragraph, title VI of the Civil Rights Act of 1964 (42 
        USC 2000d et seq.) shall apply to organizations 
        receiving assistance funded under any program described 
        in subsection (c)(4).
          ``(3) Funds not endorsement of religion.--The receipt 
        by a religious organization of Federal, State, or local 
        government funds or other assistance under this section 
        is not an endorsement by the government of religion or 
        of the organization's religious beliefs or practices.
          ``(4) Programs.--For purposes of this section, a 
        program is described in this paragraph--
                  ``(A) if it involves activities carried out 
                using Federal funds--
                          ``(i) related to the prevention and 
                        treatment of juvenile delinquency and 
                        the improvement of the juvenile justice 
                        system, including programs funded under 
                        the Juvenile Justice and Delinquency 
                        Prevention Act of 1974 (42 U.S.C. 5601 
                        et seq.);
                          ``(ii) related to the prevention of 
                        crime and assistance to crime victims 
                        and offenders' families, including 
                        programs funded under title I of the 
                        Omnibus Crime Control and Safe Streets 
                        Act of 1968 (42 U.S.C. 3701 et seq.);
                          ``(iii) related to the provision of 
                        assistance under Federal housing 
                        statutes, including the Community 
                        Development Block Grant Program 
                        established under title I of the 
                        Housing and Community Development Act 
                        of 1974 (42 U.S.C. 5301 et seq.);
                          ``(iv) under subtitle B or D of title 
                        I of the Workforce Investment Act of 
                        1998 (29 U.S.C. 2801 et seq.);
                          ``(v) under the Older Americans Act 
                        of 1965 (42 U.S.C. 3001 et seq.);
                          ``(vi) related to the intervention in 
                        and prevention of domestic violence, 
                        including programs under the Child 
                        Abuse Prevention and Treatment Act (42 
                        U.S.C. 5101 et seq.) or the Family 
                        Violence Prevention and Services Act 
                        (42 U.S.C. 10401 et seq.);
                          ``(vii) related to hunger relief 
                        activities; or
                          ``(viii) under the Job Access and 
                        Reverse Commute grant program 
                        established under section 3037 of the 
                        Federal Transit Act of 1998 (49 U.S.C. 
                        5309 note); or
                  ``(B)(i) if it involves activities to assist 
                students in obtaining the recognized 
                equivalents of secondary school diplomas and 
                activities relating to nonschool hours 
                programs, including programs under--
                          ``(I) chapter 3 of subtitle A of 
                        title II of the Workforce Investment 
                        Act of 1998 (Public Law 105-220); or
                          ``(II) part I of title X of the 
                        Elementary and Secondary Education Act 
                        (20 U.S.C. 6602 et seq.); and
                  ``(ii) except as provided in subparagraph (A) 
                and clause (i), does not include activities 
                carried out under Federal programs providing 
                education to children eligible to attend 
                elementary schools or secondary schools, as 
                defined in section 14101 of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 
                8801).
  ``(d) Organizational Character and Autonomy.--
          ``(1) In general.--A religious organization that 
        provides assistance under a program described in 
        subsection (c)(4) shall have the right to retain its 
        autonomy from Federal, State, and local governments, 
        including such organization's control over the 
        definition, development, practice, and expression of 
        its religious beliefs.
          ``(2) Additional safeguards.--Neither the Federal 
        Government, nor a State or local government with 
        Federal funds, shall require a religious organization, 
        in order to be eligible to provide assistance under a 
        program described in subsection (c)(4), to--
                  ``(A) alter its form of internal governance 
                or provisions in its charter documents; or
                  ``(B) remove religious art, icons, scripture, 
                or other symbols, or to change its name, 
                because such symbols or names are of a 
                religious character.
  ``(e) Employment Practices.--A religious organization's 
exemption provided under section 702 of the Civil Rights Act of 
1964 (42 U.S.C. 2000e-1) regarding employment practices shall 
not be affected by its participation in, or receipt of funds 
from, programs described in subsection (c)(4), and any 
provision in such programs that is inconsistent with or would 
diminish the exercise of an organization's autonomy recognized 
in section 702 or in this section shall have no effect, except 
that no religious organization receiving funds through a grant 
or cooperative agreement for programs described in subsection 
(c)(4) shall, in expending such funds allocated under such 
program, discriminate in employment on the basis of an 
employee's religion, religious belief, or a refusal to hold a 
religious belief. Nothing in this section alters the duty of a 
religious organization to comply with the nondiscrimination 
provisions of title VII of the Civil Rights Act of 1964 in the 
use of funds from programs described in subsection (c)(4).
  ``(f) Effect on Other Laws.--Nothing in this section shall 
alter the duty of a religious organization receiving assistance 
or providing services under any program described in subsection 
(c)(4) to comply with the nondiscrimination provisions in title 
VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.) 
(prohibiting discrimination on the basis of race, color, and 
national origin), title IX of the Education Amendments of 1972 
(20 U.S.C. 1681-1688) (prohibiting discrimination in education 
programs or activities on the basis of sex and visual 
impairment), section 504 of the Rehabilitation Act of 1973 (29 
U.S.C. 794) (prohibiting discrimination against otherwise 
qualified disabled individuals), and the Age Discrimination Act 
of 1975 (42 U.S.C. 6101-6107) (prohibiting discrimination on 
the basis of age).
  ``(g) Rights of Beneficiaries of Assistance.--
          ``(1) In general.--If an individual described in 
        paragraph (3) has an objection to the religious 
        character of the organization from which the individual 
        receives, or would receive, assistance funded under any 
        program described in subsection (c)(4), the appropriate 
        Federal, State, or local governmental entity shall 
        provide to such individual (if otherwise eligible for 
        such assistance) within a reasonable period of time 
        after the date of such objection, assistance that--
                  ``(A) is an alternative that is accessible to 
                the individual and unobjectionable to the 
                individual on religious grounds; and
                  ``(B) has a value that is not less than the 
                value of the assistance that the individual 
                would have received from such organization.
          ``(2) Notice.--The appropriate Federal, State, or 
        local governmental entity shall guarantee that notice 
        is provided to the individuals described in paragraph 
        (3) of the rights of such individuals under this 
        section.
          ``(3) Individual described.--An individual described 
        in this paragraph is an individual who receives or 
        applies for assistance under a program described in 
        subsection (c)(4).
  ``(h) Nondiscrimination Against Beneficiaries.--
          ``(1) Grants and cooperative agreements.--A religious 
        organization providing assistance through a grant or 
        cooperative agreement under a program described in 
        subsection (c)(4) shall not discriminate in carrying 
        out the program against an individual described in 
        subsection (g)(3) on the basis of religion, a religious 
        belief, or a refusal to hold a religious belief.
          ``(2) Indirect forms of assistance.--A religious 
        organization providing assistance through a voucher, 
        certificate, or other form of indirect assistance under 
        a program described in subsection (c)(4) shall not deny 
        an individual described in subsection (g)(3) admission 
        into such program on the basis of religion, a religious 
        belief, or a refusal to hold a religious belief.
  ``(i) Local Civil Rights Laws.--Nothwithstanding anything to 
the contrary in this section, nothing in this section preempts 
or supercedes State or local civil rights laws.
  ``(j) Accountability.--
          ``(1) In general.--Except as provided in paragraphs 
        (2) and (3), a religious organization providing 
        assistance under any program described in subsection 
        (c)(4) shall be subject to the same regulations as 
        other nongovernmental organizations to account in 
        accord with generally accepted accounting principles 
        for the use of such funds and its performance of such 
        programs.
          ``(2) Limited audit.--
                  ``(A) Grants and cooperative agreements.--A 
                religious organization providing assistance 
                through a grant or cooperative agreement under 
                a program described in subsection (c)(4) shall 
                segregate government funds provided under such 
                program into a separate account or accounts. 
                Only the separate accounts consisting of funds 
                from the government shall be subject to audit 
                by the government.
                  ``(B) Indirect forms of assistance.--A 
                religious organization providing assistance 
                through a voucher, certificate, or other form 
                of indirect assistance under a program 
                described in subsection (c)(4) may segregate 
                government funds provided under such program 
                into a separate account or accounts. If such 
                funds are so segregated, then only the separate 
                accounts consisting of funds from the 
                government shall be subject to audit by the 
                government.
          ``(3) Self audit.--A religious organization providing 
        services under any program described in subsection 
        (c)(4) shall conduct annually a self audit for 
        compliance with its duties under this section and 
        submit a copy of the self audit to the appropriate 
        Federal, State, or local government agency, along with 
        a plan to timely correct variances, if any, identified 
        in the self audit.
  ``(k) Limitations on Use of Funds; Voluntariness.--No funds 
provided through a grant or cooperative agreement to a 
religious organization to provide assistance under any program 
described in subsection (c)(4) shall be expended for sectarian 
instruction, worship, or proselytization. If the religious 
organization offers such an activity, it shall be voluntary for 
the individuals receiving services and offered separate from 
the program funded under subsection (c)(4). A certificate shall 
be separately signed by religious organizations, and filed with 
the government agency that disburses the funds, certifying that 
the organization is aware of and will comply with this 
subsection. No direct funds shall be provided under subsection 
(c)(4) to a religious organization that engages in sectarian 
instruction, worship, or proselytization at the same time and 
place as the government funded program.
  ``(l) Effect on State and Local Funds.--If a State or local 
government contributes State or local funds to carry out a 
program described in subsection (c)(4), the State or local 
government may segregate the State or local funds from the 
Federal funds provided to carry out the program or may 
commingle the State or local funds with the Federal funds. If 
the State or local government commingles the State or local 
funds, the provisions of this section shall apply to the 
commingled funds in the same manner, and to the same extent, as 
the provisions apply to the Federal funds.
  ``(m) Treatment of Intermediate Grantors.--If a 
nongovernmental organization (referred to in this subsection as 
an `intermediate grantor'), acting under a grant or other 
agreement with the Federal Government, or a State or local 
government with Federal funds, is given the authority under the 
agreement to select nongovernmental organizations to provide 
assistance under the programs described in subsection (c)(4), 
the intermediate grantor shall have the same duties under this 
section as the government when selecting or otherwise dealing 
with subgrantors, but the intermediate grantor, if it is a 
religious organization, shall retain all other rights of a 
religious organization under this section.
  ``(n) Compliance.--A party alleging that the rights of the 
party under this section have been violated by a State or local 
government may bring a civil action for injunctive relief 
pursuant to section 1979 against the State official or local 
government agency that has allegedly committed such violation. 
A party alleging that the rights of the party under this 
section have been violated by the Federal Government may bring 
a civil action for injunctive relief in Federal district court 
against the official or government agency that has allegedly 
committed such violation.
  ``(o) Training and Technical Assistance for Small 
Nongovernmental Organizations.--
          ``(1) In general.--From amounts made available to 
        carry out the purposes of the Office of Justice 
        Programs (including any component or unit thereof, 
        including the Office of Community Oriented Policing 
        Services), funds are authorized to provide training and 
        technical assistance, directly or through grants or 
        other arrangements, in procedures relating to potential 
        application and participation in programs identified in 
        subsection (c)(4) to small nongovernmental 
        organizations, as determined by the Attorney General, 
        including religious organizations, in an amount not to 
        exceed $50 million annually.
          ``(2) Types of assistance.--Such assistance may 
        include--
                  ``(A) assistance and information relative to 
                creating an organization described in section 
                501(c)(3) of the Internal Revenue Code of 1986 
                to operate identified programs;
                  ``(B) granting writing assistance which may 
                include workshops and reasonable guidance;
                  ``(C) information and referrals to other 
                nongovernmental organizations that provide 
                expertise in accounting, legal issues, tax 
                issues, program development, and a variety of 
                other organizational areas; and
                  ``(D) information and guidance on how to 
                comply with Federal nondiscrimination 
                provisions including, but not limited to, title 
                VI of the Civil Rights Act of 1964 (42 U.S.C. 
                2000d et seq.), title VII of the Civil Rights 
                Act of 1964 (42 U.S.C. 2000e et seq.), the Fair 
                Housing Act, as amended (42 U.S.C. 3601 et 
                seq.), title IX of the Education Amendments of 
                1972 (20 U.S.C. 1681-1688), section 504 of the 
                Rehabilitation Act of 1973 (29 U.S.C. 694), and 
                the Age Discrimination Act of 1975 (42 U.S.C. 
                6101-6107).
          ``(3) Reservation of funds.--An amount of no less 
        than $5,000,000 shall be reserved under this section. 
        Small nongovernmental organizations may apply for these 
        funds to be used for assistance in providing full and 
        equal integrated access to individuals with 
        disabilities in programs under this title.
          ``(4) Priority.--In giving out the assistance 
        described in this subsection, priority shall be given 
        to small nongovernmental organizations serving urban 
        and rural communities.''.

               TITLE III--INDIVIDUAL DEVELOPMENT ACCOUNTS

SEC. 301. ADDITIONAL QUALIFIED ENTITIES ELIGIBLE TO CONDUCT PROJECTS 
                    UNDER THE ASSETS FOR INDEPENDENCE ACT.

  Section 404(7)(A)(iii)(I)(aa) of the Assets for Independence 
Act (42 U.S.C. 604 note) is amended to read as follows:
                                          ``(aa) a federally 
                                        insured credit union; 
                                        or''.

SEC. 302. INCREASE IN LIMITATION ON NET WORTH.

  Section 408(a)(2)(A) of the Assets for Independence Act (42 
U.S.C. 604 note) is amended by striking ``$10,000'' and 
inserting ``$20,000''.

SEC. 303. CHANGE IN LIMITATION ON DEPOSITS FOR AN INDIVIDUAL.

  Section 410(b) of the Assets for Independence Act (42 U.S.C. 
604 note) is amended to read as follows:
  ``(b) Limitation on Deposits for an Individual.--Not more 
than $500 from a grant made under section 406(b) shall be 
provided per year to any one individual during the project.''.

SEC. 304. ELIMINATION OF LIMITATION ON DEPOSITS FOR A HOUSEHOLD.

  Section 410 of the Assets for Independence Act (42 U.S.C. 604 
note) is amended by striking subsection (c) and redesignating 
subsections (d) and (e) as subsections (c) and (d), 
respectively.

SEC. 305. EXTENSION OF PROGRAM.

  Section 416 of the Assets for Independence Act (42 U.S.C. 604 
note) is amended by striking ``2001, 2002, and 2003'' and 
inserting ``and 2001, and $50,000,000 for each of fiscal years 
2002 through 2008''.

SEC. 306. CONFORMING AMENDMENTS.

  (a) Amendments to Text.--The text of each of the following 
provisions of the Assets for Independence Act (42 U.S.C. 604 
note) is amended by striking ``demonstration'' each place it 
appears:
          (1) Section 403.
          (2) Section 404(2).
          (3) Section 405(a).
          (4) Section 405(b).
          (5) Section 405(c).
          (6) Section 405(d).
          (7) Section 405(e).
          (8) Section 405(g).
          (9) Section 406(a).
          (10) Section 406(b).
          (11) Section 407(b)(1)(A).
          (12) Section 407(c)(1)(A).
          (13) Section 407(c)(1)(B).
          (14) Section 407(c)(1)(C).
          (15) Section 407(c)(1)(D).
          (16) Section 407(d).
          (17) Section 408(a).
          (18) Section 408(b).
          (19) Section 409.
          (20) Section 410(e).
          (21) Section 411.
          (22) Section 412(a).
          (23) Section 412(b)(2).
          (24) Section 412(c).
          (25) Section 413(a).
          (26) Section 413(b).
          (27) Section 414(a).
          (28) Section 414(b).
          (29) Section 414(c).
          (30) Section 414(d)(1).
          (31) Section 414(d)(2).
  (b) Amendments to Subsection Headings.--The heading of each 
of the following provisions of the Assets for Independence Act 
(42 U.S.C. 604 note) is amended by striking ``Demonstration'':
          (1) Section 405(a).
          (2) Section 406(a).
          (3) Section 413(a).
  (c) Amendments to Section Headings.--The headings of sections 
406 and 411 of the Assets for Independence Act (42 U.S.C. 604 
note) are amended by striking ``DEMONSTRATION''.

SEC. 307. APPLICABILITY.

  (a) In General.--The amendments made by this title shall 
apply to funds provided before, on or after the date of the 
enactment of this Act.
  (b) Prior Amendments.--The amendments made by title VI of the 
Departments of Labor, Health and Human Services, and Education, 
and Related Agencies Appropriations Act, 2001 (as enacted into 
law by Public Law 106-554) shall apply to funds provided 
before, on or after the date of the enactment of such Act.

                                  
