[House Report 114-350]
[From the U.S. Government Publishing Office]


114th Congress    }                                    {        Report
                        HOUSE OF REPRESENTATIVES
 1st Session      }                                    {       114-350

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

 
TO AMEND TITLE 36, UNITED STATES CODE, TO MAKE CERTAIN IMPROVEMENTS IN 
      THE CONGRESSIONAL CHARTER OF THE DISABLED AMERICAN VETERANS

                                _______
                                

 November 30, 2015.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

   Mr. Goodlatte, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 1755]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 1755) to amend title 36, United States Code, to make 
certain improvements in the congressional charter of the 
Disabled American Veterans, having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.

                                CONTENTS

                                                                   Page

Purpose and Summary..............................................     1
Background and Need for the Legislation..........................     2
Hearings.........................................................     4
Committee Consideration..........................................     4
Committee Votes..................................................     4
Committee Oversight Findings.....................................     4
New Budget Authority and Tax Expenditures........................     5
Congressional Budget Office Cost Estimate........................     5
Duplication of Federal Programs..................................     6
Disclosure of Directed Rule Makings..............................     6
Performance Goals and Objectives.................................     6
Advisory on Earmarks.............................................     6
Section-by-Section Analysis......................................     6
Changes in Existing Law Made by the Bill, as Reported............     7

                          Purpose and Summary

    H.R. 1755 makes changes to the Federal charter of Disabled 
American Veterans to better reflect its mission.

                Background and Need for the Legislation

    Disabled American Veterans (``DAV'') was established in 
1920 and received a Federal charter in 1932.\1\ Its purposes 
are:
---------------------------------------------------------------------------
    \1\See 36 U.S.C. sec. 50301 & DAV website.

        1) Lto uphold and maintain the Constitution and laws of 
---------------------------------------------------------------------------
        the United States;

        2) Lto realize the true American ideals and aims for 
        which those eligible to membership fought;

        3) Lto advance the interests, and work for the 
        betterment, of all wounded, injured, and disabled 
        American veterans;

        4) Lto cooperate with the Department of Veterans 
        Affairs and all other public and private agencies 
        devoted to the cause of improving and advancing the 
        condition, health, and interests of all wounded, 
        injured, and disabled veterans;

        5) Lto stimulate a feeling of mutual devotion, 
        helpfulness, and comradeship among all wounded, 
        injured, and disabled veterans;

        6) Lto serve our comrades, our communities, and our 
        country, and

        7) Lto encourage in all people that spirit of 
        understanding which will guard against future wars.\2\
---------------------------------------------------------------------------
    \2\36 U.S.C. sec. 50302.

    DAV has over 1.2 million members, with membership open to a 
---------------------------------------------------------------------------
person who:

        was wounded, gassed, injured, or disabled in the line 
        of duty during time of war while in the service of the 
        military or naval forces of the United States; and . . 
        . was honorably discharged or separated from that 
        service or is still in active service in the Armed 
        Forces of the United States or . . . was disabled while 
        serving with any of the Armed Forces of a country 
        associated with the United States as an ally during any 
        of its war periods . . . is a citizen of the United 
        States; and . . . was honorably discharged.\3\
---------------------------------------------------------------------------
    \3\36 U.S.C. sec. 50303 & DAV website.

---------------------------------------------------------------------------
    The mission statement of DAV states that:

        We are dedicated to a single purpose: empowering 
        veterans to lead high-quality lives with respect and 
        dignity. We accomplish this by ensuring that veterans 
        and their families can access the full range of 
        benefits available to them; fighting for the interests 
        of America's injured heroes on Capitol Hill; and 
        educating the public about the great sacrifices and 
        needs of veterans transitioning back to civilian life.

         LProviding free, professional assistance to 
        veterans and their families in obtaining benefits and 
        services earned through military service and provided 
        by the Department of Veterans Affairs (VA) and other 
        agencies of government.

         LProviding outreach concerning its program 
        services to the American people generally, and to 
        disabled veterans and their families specifically.

         LRepresenting the interests of disabled 
        veterans, their families, their widowed spouses and 
        their orphans before Congress, the White House and the 
        Judicial Branch, as well as state and local government.

         LExtending DAV's mission of hope into the 
        communities where these veterans and their families 
        live through a network of state-level Departments and 
        local Chapters.

         LProviding a structure through which disabled 
        veterans can express their compassion for their fellow 
        veterans through a variety of volunteer programs.\4\
---------------------------------------------------------------------------
    \4\DAV website.

    DAV sent a letter to the Committee requesting a change in 
---------------------------------------------------------------------------
its Federal charter:

        For decades, DAV has been exempt from Federal taxation 
        under Section 501(c)(4) of the Internal Revenue Code\5\ 
        and its predecessor sections. This designation applies 
        to ``social welfare organizations.'' Donations to most 
        501(c)(4) organizations are not deductible for income 
        or estate tax purposes. DAV is a rare exception, as it 
        qualifies to receive deductible contributions as a 
        ``war veterans'' organization.\6\
---------------------------------------------------------------------------
    \5\Organizations are exempt from Federal corporate and certain 
other taxes if they are ``[c]ivic leagues or organizations not 
organized for profit but operated exclusively for the promotion of 
social welfare, or local associations of employees, the membership of 
which is limited to the employees of a designated person or persons in 
a particular municipality, and the net earnings of which are devoted 
exclusively to charitable, educational, or recreational purposes [so 
long as] no part of the net earnings of such entity inures to the 
benefit of any private shareholder or individual.'' 26 U.S.C. sec. 
501(c)(4).
    See 26 U.S.C. sec. 501(c)(4).
    \6\26 U.S.C. sec. 170(c)(3) provides that deductible charitable 
contributions can be made to ``[a] post or organization of war 
veterans, or an auxiliary unit or society of, or trust or foundation 
for, any such post or organization--(A) organized in the United States 
or any of its possessions, and (B) no part of the net earnings of which 
inures to the benefit of any private shareholder or individual.'' In 
addition, 26 U.S.C. sec. 2055(a)(4) provides that bequests, legacies, 
devises and transfers ``to or for the use of any veterans' organization 
incorporated by Act of Congress, or of its departments or local 
chapters or posts, no part of the net earnings of which inures to the 
benefit of any private shareholder or individual. . . .'' are not 
subject to the Federal estate tax.

        Many donors, even sophisticated donors, believe 
        incorrectly that charitable deductions are available 
        only for gifts made to a 501(c)(3) organization,\7\ 
        more commonly known as a ``public charity.'' We believe 
        that this misconception has been limiting DAV's 
        opportunities to gain corporate support and major 
        gifts, including bequests.
---------------------------------------------------------------------------
    \7\Organizations are exempt from Federal corporate and certain 
other taxes if they are ``[c]orporations[ or] any community chest, 
fund, or foundation, organized and operated exclusively for religious, 
charitable, scientific, testing for public safety, literary, or 
educational purposes, or to foster national or international amateur 
sports competition (but only if no part of its activities involve the 
provision of athletic facilities or equipment), or for the prevention 
of cruelty to children or animals, no part of the net earnings of which 
inures to the benefit of any private shareholder or individual, no 
substantial part of the activities of which is carrying on propaganda, 
or otherwise attempting, to influence legislation . . . and which does 
not participate in, or intervene in (including the publishing or 
distributing of statements), any political campaign on behalf of (or in 
opposition to) any candidate for public office.'' 26 U.S.C. sec. 
501(c)(3).

        There is no doubt that DAV's activities of service to 
        wounded and disabled veterans would enable it to 
        qualify as a public charity, exempt from taxation under 
        Section 501(c)(3) of the Internal Revenue Code. To 
        achieve that designation, the organization needs to 
        make application to the Internal Revenue Service. The 
        application requires that certain language be included 
        in the ``organizing document,'' which in our case is 
        the Federal charter.\8\
---------------------------------------------------------------------------
    \8\Part III of the Internal Revenue Service's Form 1023 
(Application for Recognition of Exemption Under Section 501(c)(3) of 
the Internal Revenue Code) states that ``[s]ection 501(c)(3) requires 
that your organizing document state your exempt purpose(s), such as 
charitable, religious, educational, and/or scientific purposes. Check 
the box to confirm that your organizing document meets this 
requirement. Describe specifically where your organizing document meets 
this requirement, such as a reference to a particular article or 
section in your organizing document. Refer to the instructions for 
exempt purpose language. Location of Purpose Clause (Page, Article, and 
Paragraph):_____'' It also states that ``[s]ection 501(c)(3) requires 
that upon dissolution of your organization, your remaining assets must 
be used exclusively for exempt purposes, such as charitable, religious, 
educational, and/or scientific purposes. Check the box on line 2a to 
confirm that your organizing document meets this requirement by express 
provision for the distribution of assets upon dissolution. If you rely 
on state law for your dissolution provision, do not check the box on 
line 2a and go to line 2c. If you checked the box on line 2a, specify 
the location of your dissolution clause (Page, Article, and 
Paragraph)._____''

        Specifically, the requested amendments make explicit 
        DAV's exclusively charitable purpose, explain the 
        educational component of its mission and mandate the 
        assignment of its assets to the Department of Veterans 
        Affairs in the event of dissolution. Inclusion of these 
        provisions in the charter will simplify greatly our 
        conversion to (c)(3) status.\9\
---------------------------------------------------------------------------
    \9\Letter from J. Marc Burgess, National Adjutant, DAV, to the 
Judiciary Committee, July 10, 2015.

                                Hearings

    The Committee on the Judiciary held no hearings on H.R. 
1755.

                        Committee Consideration

    On September 17, 2015, the Committee met in open session 
and ordered the bill H.R. 1755 favorably reported without 
amendment, by a voice vote, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that there 
were no recorded votes during the Committee's consideration of 
H.R. 1755.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 1755, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, November 23, 2015.
Hon. Bob Goodlatte, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1755, a bill to 
amend title 36, United States Code, to make certain 
improvements in the congressional charter of the Disabled 
American Veterans.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Dwayne M. 
Wright, who can be reached at 226-2840.
            Sincerely,
                                                Keith Hall,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member




   H.R. 1755--a bill to amend title 36, United States Code, to make 
   certain improvements in the congressional charter of the Disabled 
                           American Veterans.

      As ordered reported by the House Committee on the Judiciary 
                         on September 17, 2015.




    H.R. 1755 would amend the charter of the Disabled American 
Veterans (DAV) to specify that DAV is organized for charitable 
and educational purposes, and to ensure that upon dissolution 
of the organization any remaining assets would be transferred 
to the Department of Veterans Affairs. Those changes could 
allow DAV to qualify as a ``public charity'' under the Internal 
Revenue Code, and thus might lead to an increase in tax 
deductible donations. However, because DAV is already exempt 
from Federal taxation and qualified to receive deductible 
contributions as a ``war veterans'' organization, CBO and the 
staff of the Joint Committee on Taxation expect that such 
changes would have a negligible effect on Federal revenues.
    Enacting H.R. 1755 would not affect direct spending, but 
would have a negligible effect on revenues; therefore, pay-as-
you-go procedures apply. CBO estimates that enacting H.R. 1755 
would not increase net direct spending or on-budget deficits by 
more than $5 billion in any of the four consecutive 10-year 
periods beginning in 2026.
    H.R. 1755 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of State, local, or tribal 
governments.
    The CBO staff contact for this estimate is Dwayne M. 
Wright. The estimate was approved by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

                    Duplication of Federal Programs

    No provision of H.R. 1755 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that H.R. 1755 specifically directs 
to be completed no specific rule makings within the meaning of 
5 U.S.C. 551.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
1755 makes changes to the Federal charter of Disabled American 
Veterans to better reflect its mission.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 1755 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
Sec. 1. Congressional Charter of Disabled American Veterans
    Subsection (a) amends 36 U.S.C. section 50302 by stating 
that DAV is organized exclusively for charitable and 
educational purposes and by adding two new purposes of the 
organization--1) to educate the public about the sacrifices and 
needs of disabled veterans, and 2) to educate disabled veterans 
about the benefits and resources available to them.
    Subsection (b) adds section 50309 to title 36 providing 
that on dissolution or final liquidation of DAV, any assets 
remaining after the discharge or satisfactory provision for the 
discharge of all liabilities shall be transferred to the 
Secretary of Veterans Affairs for the care of disabled 
veterans.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                      TITLE 36, UNITED STATES CODE



           *       *       *       *       *       *       *
SUBTITLE II--PATRIOTIC AND NATIONAL ORGANIZATIONS

           *       *       *       *       *       *       *


PART B--ORGANIZATIONS

           *       *       *       *       *       *       *


CHAPTER 503--DISABLED AMERICAN VETERANS

           *       *       *       *       *       *       *


Sec. 50302. Purposes

     [The purposes of the corporation are] The corporation is 
organized exclusively for charitable and educational purposes. 
The purposes of the corporation shall include----
            (1) to uphold and maintain the Constitution and 
        laws of the United States;
            (2) to realize the true American ideals and aims 
        for which those eligible to membership fought;
            (3) to advance the interests, and work for the 
        betterment, of all wounded, injured, and disabled 
        American veterans;
            (4) to cooperate with the Department of Veterans 
        Affairs and all other public and private agencies 
        devoted to the cause of improving and advancing the 
        condition, health, and interests of all wounded, 
        injured, and disabled veterans;
            (5) to stimulate a feeling of mutual devotion, 
        helpfulness, and comradeship among all wounded, 
        injured, and disabled veterans;
            (6) to serve our comrades, our communities, and our 
        country; [and]
            (7) to educate the public about the sacrifices and 
        needs of disabled veterans;
            (8) to educate disabled veterans about the benefits 
        and resources available to them; and
            [(7)] (9) to encourage in all people that spirit of 
        understanding which will guard against future wars.

           *       *       *       *       *       *       *


Sec. 50309. Dissolution

    On dissolution or final liquidation of the corporation, any 
assets remaining after the discharge or satisfactory provision 
for the discharge of all liabilities shall be transferred to 
the Secretary of Veterans Affairs for the care of disabled 
veterans.

           *       *       *       *       *       *       *


                                  [all]