[House Report 118-331]
[From the U.S. Government Publishing Office]


118th Congress }                                          { REPORT 
                        HOUSE OF REPRESENTATIVES
 1st Session   }                                          { 118-331

======================================================================
 
TO AMEND THE INTERNAL REVENUE CODE OF 1986 TO TERMINATE THE TAX-EXEMPT 
              STATUS OF TERRORIST SUPPORTING ORGANIZATIONS

                                _______
                                

 December 19, 2023.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Smith of Missouri, from the Committee on Ways and Means, submitted 
                             the following

                              R E P O R T

                        [To accompany H.R. 6408]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 6408) to amend the Internal Revenue Code of 1986 to 
terminate the tax-exempt status of terrorist supporting 
organizations, having considered the same, reports favorably 
thereon with an amendment and recommends that the bill as 
amended do pass.

                                CONTENTS

                                                                   Page
  I. SUMMARY AND BACKGROUND...........................................3
          A. Purpose and Summary.................................     3
          B. Background and Need for Legislation.................     3
          C. Legislative History.................................     5
          D. Designated Hearing..................................     5
 II. EXPLANATION OF THE BILL..........................................5
          A. Termination of Tax-Exempt Status of Terrorist 
              Supporting Organizations (sec. 1 of the bill and 
              sec. 501(p) of the Code)...........................     5
III. VOTE OF THE COMMITTEE............................................9
 IV. BUDGET EFFECTS OF THE BILL......................................10
          A. Congressional Budget Office Cost Estimate...........    10
          B. Committee Estimate of Budgetary Effects.............    10
          C. Statement Regarding New Budget Authority and Tax 
              Expenditures Budget Authority......................    10
  V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......10
          A. Committee Oversight Findings and Recommendations....    10
          B. Statement of General Performance Goals and 
              Objectives.........................................    10
          C. Information Relating to Unfunded Mandates...........    10
          D. Congressional Earmarks, Limited Tax Benefits, and 
              Limited Tariff Benefits............................    11
          E. Duplication of Federal Programs.....................    11
          F. Tax Complexity Analysis.............................    11
 VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........11

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. TERMINATION OF TAX-EXEMPT STATUS OF TERRORIST SUPPORTING 
                    ORGANIZATIONS.

  (a) In General.--Section 501(p) of the Internal Revenue Code of 1986 
is amended by adding at the end the following new paragraph:
          ``(8) Application to terrorist supporting organizations.--
                  ``(A) In general.--For purposes of this subsection, 
                in the case of any terrorist supporting organization--
                          ``(i) such organization (and the designation 
                        of such organization under subparagraph (B)) 
                        shall be treated as described in paragraph (2), 
                        and
                          ``(ii) the period of suspension described in 
                        paragraph (3) with respect to such organization 
                        shall be treated as beginning on the date that 
                        the Secretary designates such organization 
                        under subparagraph (B) and ending on the date 
                        that the Secretary rescinds such designation 
                        under subparagraph (D).
                  ``(B) Terrorist supporting organization.--For 
                purposes of this paragraph, the term `terrorist 
                supporting organization' means any organization which 
                is designated by the Secretary as having provided, 
                during the 3-year period ending on the date of such 
                designation, material support or resources (within the 
                meaning of section 2339B of title 18, United States 
                Code) to an organization described in paragraph (2) 
                (determined after the application of this paragraph to 
                such organization) in excess of a de minimis amount.
                  ``(C) Designation procedure.--
                          ``(i) Notice requirement.--Prior to 
                        designating any organization as a terrorist 
                        supporting organization under subparagraph (B), 
                        the Secretary shall mail to the most recent 
                        mailing address provided by such organization 
                        on the organization's annual return or notice 
                        under section 6033 (or subsequent form 
                        indicating a change of address) a written 
                        notice which includes--
                                  ``(I) a statement that the Secretary 
                                will designate such organization as a 
                                terrorist supporting organization 
                                unless the organization satisfies the 
                                requirements of subclause (I) or (II) 
                                of clause (ii),
                                  ``(II) the name of the organization 
                                or organizations with respect to which 
                                the Secretary has determined such 
                                organization provided material support 
                                or sources as described in subparagraph 
                                (B), and
                                  ``(III) a description of such 
                                material support or resources to the 
                                extent consistent with national 
                                security and law enforcement interests.
                          ``(ii) Opportunity to cure.--In the case of 
                        any notice provided to an organization under 
                        clause (i), the Secretary shall, at the close 
                        of the 90-day period beginning on the date that 
                        such notice was sent, designate such 
                        organization as a terrorist supporting 
                        organization under subparagraph (B) if (and 
                        only if) such organization has not (during such 
                        period)--
                                  ``(I) demonstrated to the 
                                satisfaction of the Secretary that such 
                                organization did not provide the 
                                material support or resources referred 
                                to in subparagraph (B), or
                                  ``(II) made reasonable efforts to 
                                have such support or resources returned 
                                to such organization and certified in 
                                writing to the Secretary that such 
                                organization will not provide any 
                                further support or resources to 
                                organizations described in paragraph 
                                (2).
                        A certification under subclause (II) shall not 
                        be treated as valid if the organization making 
                        such certification has provided any other such 
                        certification during the preceding 5 years.
                  ``(D) Rescission.--The Secretary shall rescind a 
                designation under subparagraph (B) if (and only if)--
                          ``(i) the Secretary determines that such 
                        designation was erroneous,
                          ``(ii) after the Secretary receives a written 
                        certification from an organization that such 
                        organization did not receive the notice 
                        described in subparagraph (C)(i)--
                                  ``(I) the Secretary determines that 
                                it is reasonable to believe that such 
                                organization did not receive such 
                                notice, and
                                  ``(II) such organization satisfies 
                                the requirements of subclause (I) or 
                                (II) of subparagraph (C)(ii) 
                                (determined after taking into account 
                                the last sentence thereof), or
                          ``(iii) the Secretary determines, with 
                        respect to all organizations to which the 
                        material support or resources referred to in 
                        subparagraph (B) were provided, the periods of 
                        suspension under paragraph (3) have ended.
                A certification described in the matter preceding 
                subclause (I) of clause (II) shall not be treated as 
                valid if the organization making such certification has 
                provided any other such certification during the 
                preceding 5 years.
                  ``(E) Administrative review by internal revenue 
                service independent office of appeals.--In the case of 
                the designation of an organization by the Secretary as 
                a terrorist supporting organization under subparagraph 
                (B), a dispute regarding such designation shall be 
                subject to resolution by the Internal Revenue Service 
                Independent Office of Appeals under section 7803(e) in 
                the same manner as if such designation were made by the 
                Internal Revenue Service and paragraph (5) of this 
                subsection did not apply.
                  ``(F) Jurisdiction of united states courts.--
                Notwithstanding paragraph (5), the United States 
                district courts shall have exclusive jurisdiction to 
                review a final determination with respect to an 
                organization's designation as a terrorist supporting 
                organization under subparagraph (B). In the case of any 
                such determination which was based on classified 
                information (as defined in section 1(a) of the 
                Classified Information Procedures Act), such 
                information may be submitted to the reviewing court ex 
                parte and in camera. For purposes of this subparagraph, 
                a determination with respect to an organization's 
                designation as a terrorist supporting organization 
                shall not fail to be treated as a final determination 
                merely because such organization fails to utilize the 
                dispute resolution process of the Internal Revenue 
                Service Independent Office of Appeals provided under 
                subparagraph (E).''.
  (b) Effective Date.--The amendment made by this section shall apply 
to designations made after the date of the enactment of this Act in 
taxable years ending after such date.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    The bill, H.R. 6408, to amend the Internal Revenue Code of 
1986 to terminate the tax- exempt status of terrorist 
supporting organizations, as ordered reported by the Committee 
on Ways and Means on November 30, 2023.
    Section 2 of the bill provides for suspension of the tax-
exempt status of a terrorist supporting organization, prohibits 
such an organization from applying for tax-exempt status, and 
disallows a charitable deduction for a contribution to such an 
organization. For this purpose, a terrorist supporting 
organization is an organization that is designated by the 
Secretary of the Treasury as having provided material support 
or resources during the three-year period ending on the date of 
such designation to an organization designated as a terrorist 
organization or terrorist supporting organization under section 
501(p) of the Internal Revenue Code. The bill describes the 
procedure for designating an organization as a terrorist 
supporting organization, including requirements for providing 
notice in advance of a designation and an opportunity to for an 
organization to take certain curative actions. The bill also 
describes opportunities for administrative and judicial review 
of a designation as a terrorist supporting organization.

                 B. Background and Need for Legislation

    Following the October 7, 2023 terrorist attack on Israel by 
Hamas, a listed terrorist organization, and contemporaneous 
college student organization statements in support of Hamas, 
the Committee held a hearing to consider the possible role of 
U.S. tax-exempt organizations in supporting global terrorism. 
The Committee on Financial Services held a similar hearing to 
consider the federal government's efforts to block fundraising 
by Hezbollah and Hamas. Both committees heard testimony from 
witnesses who testified about fundraising activities by foreign 
terrorist organizations and the recent activities of U.S. and 
foreign tax-exempt organizations.
    The Committee learned that the Secretary has not suspended 
the tax-exempt status of any organization because it is a 
terrorist organization since 2009, and it has only suspended 
nine such organizations.\1\ The Secretary has only suspended 
the tax-exempt status of organizations that themselves are 
designated as terrorist organizations under section 501(p)(2), 
and the Secretary has not suspended any other tax-exempt 
organization on the basis that it has provided material support 
or resources to a listed terrorist organization.
---------------------------------------------------------------------------
    \1\A tenth organization, KindHearts for Charitable Humanitarian 
Development, Inc., was suspended in 2006, but the suspension was lifted 
in connection with a legal settlement in which KindHearts disbanded in 
2012.
---------------------------------------------------------------------------
    Under current law, generally, a tax-exempt organization 
must be designated as a terrorist organization itself before 
its tax-exempt status is suspended. The Committee heard 
testimony from one witness that numerous individuals who worked 
for one tax-exempt organization previously suspended by the 
Secretary now work for a new tax-exempt organization that 
appears to be providing various types of support to the same 
designated terrorist organization (Hamas).
    The witness testified that non-tax considerations can 
influence the decision to designate an organization as a 
terrorist organization. As a result, under present law, some 
tax-exempt organizations that provide material support or 
resources to a terrorist organization--through recklessness, 
negligence, or even deliberately--can continue to benefit from 
tax-exempt status because it is the policy of the federal 
government not to list such organizations as terrorist 
organizations.
    The Committee believes that any tax-exempt organization 
that provides more than a de minimis amount of material support 
or resources to a listed terrorist organization--within the 
meaning of section 2339B of Title 18 of the U.S. Code--is not 
acting in a manner consistent with the purposes of federal tax 
exemption under section 501 and the Secretary of the Treasury 
therefore should suspend its tax-exempt status. The Committee 
believes the Secretary must also be empowered to suspend the 
tax-exempt status of an organization providing such support on 
the basis of information available to the Secretary without 
considering the non-tax implications of designating an 
organization as a terrorist organization under authorities such 
as section 212 or 219 of the Immigration and Nationality Act, 
the International Emergency Economic Powers Act, or section 5 
of the United Nationals Participation Act of 1945.
    Given the significance of a suspension for the 
organization, the Committee also believes that organizations 
found to have provided such support should have an opportunity 
to rebut adverse findings or mitigate the effects of such 
support by taking reasonable efforts to recover any support 
provided while certifying in writing that the organization will 
not provide any further support or resources to any listed 
terrorist organization. To further assure that the rationale 
for suspension is well founded, suspended organizations will 
have access to review by the independent IRS Office of Appeals 
and to federal district courts to adjudicate claims of 
erroneous suspensions.

                         C. Legislative History


                               BACKGROUND

    H.R. 6408 was introduced on November 14, 2023, and was 
referred to the Committee on Ways and Means.

                           COMMITTEE HEARINGS

    On November 15, 2023 the Committee held a hearing titled 
``From Ivory Towers to Dark Corners: Investigating the Nexus 
Between Antisemitism, Tax-Exempt Universities, and Terror 
Financing.''

                            COMMITTEE ACTION

    The Committee on Ways and Means marked up H.R. 6408, a bill 
to amend the Internal Revenue Code of 1986 to terminate the 
tax-exempt status of terrorist supporting organizations, on 
November 30, 2023, and ordered the bill, as amended, favorably 
reported (with a quorum being present).

                         D. Designated Hearing

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearings were used to develop and consider H.R. 6408:
    Committee on Ways and Means: ``From Ivory Towers to Dark 
Corners: Investigating the Nexus Between Antisemitism, Tax-
Exempt Universities, and Terror Financing,'' November 15, 2023.
    Committee on Financial Services: ``How America and Its 
Allies Can Stop Hamas, Hezbollah, and Iran from Evading 
Sanctions and Financing Terror,'' October 25, 2023.

                      II. EXPLANATION OF THE BILL


      A. Termination of Tax-Exempt Status of Terrorist Supporting 
     Organizations (Sec. 1 of the Bill and Sec. 501(p) of the Code)


                              PRESENT LAW

Revocation of tax-exempt status, in general

    Under present law, the Internal Revenue Service (``IRS'') 
generally issues a letter revoking recognition of an 
organization's tax-exempt status only after (1) conducting an 
examination of the organization, (2) issuing a letter to the 
organization proposing revocation, and (3) allowing the 
organization to exhaust the administrative appeal rights that 
follow the issuance of the proposed revocation letter. In the 
case of an organization described in section 501(c) or (d), the 
revocation letter immediately is subject to judicial review 
under the declaratory judgment procedures of section 7428. To 
sustain a revocation of tax-exempt status under section 7428, 
the IRS must demonstrate that the organization is no longer 
entitled to exemption.

Suspension of tax-exempt status of terrorist organizations (section 
        501(p))

    To combat terrorism, the Federal government has designated 
a number of organizations as terrorist organizations or 
supporters of terrorism under the Immigration and Nationality 
Act, the International Emergency Economic Powers Act, and the 
United Nations Participation Act of 1945.
    The tax-exempt status of an organization that is exempt 
from tax under section 501(a) is suspended for any period 
during which the organization is designated or identified by 
Federal authorities as a terrorist organization or supporter of 
terrorism. An organization so designated or identified is also 
ineligible to apply for tax-exemption under section 501(a). The 
period of suspension runs from the date the organization is 
first designated or identified (or from November 11, 2003 (the 
date of enactment of section 501(p)), if later) to the date 
when all designations or identifications with respect to the 
organization have been rescinded pursuant to the law or 
Executive Order under which the designation or identification 
was made.
    For this purpose, a terrorist organization is an 
organization that has been designated or otherwise individually 
identified (1) as a terrorist organization or foreign terrorist 
organization under the authority of section 
212(a)(3)(B)(vi)(II) or section 219 of the Immigration and 
Nationality Act; (2) in or pursuant to an Executive Order that 
is related to terrorism and issued under the authority of the 
International Emergency Economic Powers Act or section 5 of the 
United Nations Participation Act for the purpose of imposing on 
such organization an economic or other sanction; or (3) in or 
pursuant to an Executive Order that refers to the provision and 
is issued under the authority of any Federal law if the 
organization is designated or otherwise individually identified 
in or pursuant to such Executive Order as supporting or 
engaging in terrorist activity (as defined in section 
212(a)(3)(B) of the Immigration and Nationality Act) or 
supporting terrorism (as defined in section 140(d)(2) of the 
Foreign Relations Authorization Act, Fiscal Years 1988 and 
1989). During the period of suspension, no deduction for any 
contribution to a terrorist organization is allowed under the 
Code, including under sections 170, 545(b)(2), 556(b)(2), 
642(c), 2055, 2106(a)(2), or 2522.
    No organization or other person may challenge, under 
section 7428 or any other provision of law, in any 
administrative or judicial proceeding relating to the Federal 
tax liability of such organization or other person, the 
following: the suspension of tax exemption, the ineligibility 
to apply for tax-exemption, a designation or identification 
described above, the timing of the period of suspension, or a 
denial of deduction described above. The suspended organization 
may maintain other suits or administrative actions against the 
agency or agencies that designated or identified the 
organization, for the purpose of challenging such designation 
or identification (but not the suspension of tax-exempt status 
under this provision).
    If the tax exemption of an organization is suspended and 
each designation and identification that has been made with 
respect to the organization is determined to be erroneous 
pursuant to the law or Executive Order making the designation 
or identification, and such erroneous designation results in an 
overpayment of income tax for any taxable year with respect to 
such organization, a credit or refund (with interest) with 
respect to such overpayment shall be made. If the operation of 
any law or rule of law (including res judicata) prevents the 
credit or refund at any time, the credit or refund may 
nevertheless be allowed or made if the claim for such credit or 
refund is filed before the close of the one-year period 
beginning on the date that the last remaining designation or 
identification with respect to the organization is determined 
to be erroneous.
    The IRS is directed to update the listings of tax-exempt 
organizations to take account of organizations that have had 
their exemption suspended and to publish notice to taxpayers of 
the suspension of an organization's tax-exemption and the fact 
that contributions to such organization are not deductible 
during the period of suspension.
    As of this writing, there are nine organizations on the 
IRS's list of organizations suspended under section 501(p).\2\
---------------------------------------------------------------------------
    \2\See https://www.irs.gov/charities-non-profits/charitable-
organizations/suspensions-pursuant-to-code-section-501p.
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee recently has received testimony about links 
between domestic organizations with tax-exempt status and 
international terrorist organizations and believes the Internal 
Revenue Code should not be used to subsidize or finance violent 
terrorism around the world. The provision addresses this 
concern by providing for the suspension of the tax-exempt 
status of certain organizations that provide material support 
or resources to terrorist organizations, prohibiting such 
organizations from applying for tax-exempt status, and 
disallowing charitable deductions for contributions to such 
organizations.
    The provision is carefully crafted to protect organizations 
from erroneous designation as a terrorist supporting 
organization through various due-process mechanisms, including 
a requirement that the Secretary provide written notice 90 days 
before such a designation, during which time the organization 
has an opportunity to demonstrate that it did not provide the 
material support or resources or to undertake other specified 
curative actions. The provision allows an organization to 
challenge a designation as a terrorist supporting organization 
before the IRS Independent Office of Appeals and also to seek 
review of a final determination with respect to such a 
designation in a U.S. district court.

                        EXPLANATION OF PROVISION

In general

    The provision extends section 501(p) such that it applies 
not only to terrorist organizations (as under present law) but 
also to terrorist supporting organizations. The provision 
treats a terrorist supporting organization as a terrorist 
organization described in section 501(p)(2). The effect of this 
treatment is that the tax-exempt status of a terrorist 
supporting organization, and the eligibility of such 
organization to apply for tax-exempt status, are suspended. The 
period of suspension of a terrorist supporting organization is 
treated as beginning on the date the Secretary designates the 
organization as a terrorist supporting organization and ending 
on the date the Secretary rescinds the designation, as 
described below.
    A terrorist supporting organization is any organization 
that is designated by the Secretary as having provided, during 
the three-year period ending on the date of such designation, 
material support or resources to a terrorist organization or 
terrorist supporting organization described in section 501(p) 
in excess of a de minimis amount. For this purpose, the term 
``material support or resources'' is defined by reference to 
section 2339B of Title 18 of the U.S. Code.\3\
---------------------------------------------------------------------------
    \3\Section 2339B defines ``material support or resources''' by 
reference to section 2339A of Title 18 of the U.S. Code. Section 2339A, 
in turn, provides that material support or resources means ``any 
property, tangible or intangible, or service, including currency or 
monetary instruments or financial securities, financial services, 
lodging, training, expert advice or assistance, safehouses, false 
documentation or identification, communications equipment, facilities, 
weapons, lethal substances, explosives, personnel (1 or more 
individuals who may be or include oneself), and transportation, except 
medicine or religious materials.'' The term ``training'' is defined as 
``instruction or teaching designed to impart a specific skill, as 
opposed to general knowledge.'' The term ``expert advice or 
assistance'' is defined as ``advice or assistance derived from 
scientific, technical or other specialized knowledge.''
---------------------------------------------------------------------------

Notice requirement

    Before designating an organization as a terrorist 
supporting organization, the Secretary is required to mail to 
the most recent mailing address provided to the IRS on its most 
recent annual information return or notice filed with the IRS 
(or subsequently submitted form indicating a change of address) 
a written notice. The notice must include: (1) a statement that 
the Secretary will designate the organization as a terrorist 
supporting organization unless the organization satisfies the 
requirements outlined in the following paragraph (relating to 
opportunity to cure), (2) the name of the organization or 
organizations with respect to which the Secretary has 
determined such organization provided material support or 
resources, and (3) a description of such material support or 
resources, to the extent consistent with national security and 
law enforcement interests.

Opportunity to cure

    In the case of such a notice, the Secretary shall, at the 
end of the 90-day period beginning on the date the notice was 
sent, designate the organization as a terrorist supporting 
organization if, and only if, the organization has not during 
such period: (1) demonstrated to the satisfaction of the 
Secretary that the organization did not provide the material 
support or resources, or (2) made reasonable efforts to have 
such support or resources returned to such organization and 
certified in writing to the Secretary that such organization 
will not provide any further support or resources to a 
terrorist organization or terrorist supporting organization 
described in section 501(p)(2). Such a certification is not 
valid if the organization making the certification has provided 
any other such certification during the preceding five years.

Rescission of designation

    The Secretary shall rescind a designation if and only if: 
(1) the Secretary determines that the designation was 
erroneous; (2) after the Secretary receives a certification 
from an organization that it did not receive the notice 
described above, (a) the Secretary determines that it is 
reasonable to believe that the organization did not receive the 
notice, and (b) the organization satisfies the above 
requirements relating to curing a deficiency (that is, the 
organization demonstrates that it did not provide material 
support or resources or made reasonable efforts to have such 
support or resources returned and makes the required 
certification); or (3) the Secretary determines that the 
periods of suspension for all organizations to which the 
material support or resources were provided have ended. The 
certification described in (2) above is not treated as valid if 
the organization making the certification has provided any 
other such certification during the preceding five years.

Administration and judicial review of designation

    Notwithstanding the present-law rule that disallows a 
challenge to a designation as a terrorist organization in 
certain administrative or judicial proceedings (section 
501(p)(5)), in the case of the designation of an organization 
as a terrorist supporting organization, a dispute regarding 
such designation is subject to resolution by the IRS 
Independent Office of Appeals (``IRS Appeals'') under section 
7803(e) (which describes IRS Appeals). The dispute is subject 
to IRS Appeals resolution in the same manner as if the 
designation were made by the IRS. In addition, notwithstanding 
section 501(p)(5), the United States district courts shall have 
exclusive jurisdiction to review a final determination with 
respect to an organization's designation as a terrorist 
supporting organization. In the case of a determination that 
was based on classified information (as defined in section 1(a) 
of the Classified Information Procedures Act), such information 
may be submitted to the reviewing court ex parte and in camera. 
For purposes of such judicial review, a determination shall not 
fail to be treated as a final determination merely because the 
organization fails to utilize the dispute resolution process of 
IRS Appeals described above.

                             EFFECTIVE DATE

    The provision is effective for designations made after the 
date of enactment in taxable years ending after such date.

                       III. VOTE OF THE COMMITTEE

    Pursuant to clause 3(b) of rule XIII of the Rules of the 
House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means in its 
consideration of H.R. 6408, a bill to amend the Internal 
Revenue Code of 1986 to terminate the tax-exempt status of 
terrorist supporting organizations, on November 30, 2023.
    H.R. 6408 was ordered favorably reported to the House of 
Representatives as amended by a roll call vote of 41 yeas to 0 
nays (with a quorum being present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith (MO).................        X   ........  .........  Mr. Neal.........        X   ........  .........
Mr. Buchanan...................        X   ........  .........  Mr. Doggett......        X   ........  .........
Mr. Smith (NE).................        X   ........  .........  Mr. Thompson.....        X   ........  .........
Mr. Kelly......................  ........  ........  .........  Mr. Larson.......        X   ........  .........
Mr. Schweikert.................        X   ........  .........  Mr. Blumenauer...        X   ........  .........
Mr. LaHood.....................        X   ........  .........  Mr. Pascrell.....        X   ........  .........
Dr. Wenstrup...................        X   ........  .........  Mr. Davis........        X   ........  .........
Mr. Arrington..................        X   ........  .........  Ms. Sanchez......        X   ........  .........
Dr. Ferguson...................        X   ........  .........  Mr. Higgins......        X   ........  .........
Mr. Estes......................        X   ........  .........  Ms. Sewell.......        X   ........  .........
Mr. Smucker....................        X   ........  .........  Ms. DelBene......        X   ........  .........
Mr. Hern.......................        X   ........  .........  Ms. Chu..........        X   ........  .........
Ms. Miller.....................        X   ........  .........  Ms. Moore........        X   ........  .........
Dr. Murphy.....................        X   ........  .........  Mr. Kildee.......        X   ........  .........
Mr. Kustoff....................        X   ........  .........  Mr. Beyer........        X   ........  .........
Mr. Fitzpatrick................        X   ........  .........  Mr. Evans........        X   ........  .........
Mr. Steube.....................  ........  ........  .........  Mr. Schneider....        X   ........  .........
Ms. Tenney.....................        X   ........  .........  Mr. Panetta......        X   ........  .........
Mrs. Fischbach.................        X
Mr. Moore......................        X
Mrs. Steel.....................        X
Ms. Van Duyne..................        X
Mr. Feenstra...................        X
Ms. Malliotakis................        X
Mr. Carey......................        X
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFFECTS OF THE BILL


              A. Congressional Budget Office Cost Estimate

    With respect to the requirement of clause 3(d) of rule XIII 
of the Rules of the House of Representatives, a cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974 was not made 
available to the Committee in time for the filing of this 
report.

               B. Committee Estimate of Budgetary Effects

    The bill is estimated to have a negligible effect on 
Federal fiscal year budget receipts for the period 2024 through 
2033.

C. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives, the Committee made findings and 
recommendations that are reflected in this report.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill does not authorize funding, so no statement of general 
performance goals and objectives is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

  D. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill, and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                   E. Duplication of Federal Programs

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
from the Government Accountability Office to Congress pursuant 
to section 21 of Public Law 111-139; or (3) a program related 
to a program identified in the most recent Catalog of Federal 
Domestic Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

                       F. Tax Complexity Analysis

    Section 4022(b) of the Internal Revenue Service Reform and 
Restructuring Act of 1998 (``IRS Reform Act'') requires the 
staff of the Joint Committee on Taxation (in consultation with 
the Internal Revenue Service and the Treasury Department) to 
provide a tax complexity analysis. The complexity analysis is 
required for all legislation reported by the Senate Committee 
on Finance, the House Committee on Ways and Means, or any 
committee of conference if the legislation includes a provision 
that directly or indirectly amends the Internal Revenue Code 
and has widespread applicability to individuals or small 
businesses. The staff of the Joint Committee on Taxation has 
determined that there are no provisions that are of widespread 
applicability to individuals or small businesses.

       VI. 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 (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

                     INTERNAL REVENUE CODE OF 1986




           *       *       *       *       *       *       *
Subtitle A--Income Taxes

           *       *       *       *       *       *       *


CHAPTER 1--NORMAL TAXES AND SURTAXES

           *       *       *       *       *       *       *


Subchapter F--EXEMPT ORGANIZATIONS

           *       *       *       *       *       *       *


PART I--GENERAL RULE

           *       *       *       *       *       *       *



SEC. 501. EXEMPTION FROM TAX ON CORPORATIONS, CERTAIN TRUSTS, ETC.

  (a) Exemption from taxation.--An organization described in 
subsection (c) or (d) or section 401(a) shall be exempt from 
taxation under this subtitle unless such exemption is denied 
under section 502 or 503.
  (b) Tax on unrelated business income and certain other 
activities.--An organization exempt from taxation under 
subsection (a) shall be subject to tax to the extent provided 
in parts II, III, and VI of this subchapter, but 
(notwithstanding parts II, III, and VI of this subchapter) 
shall be considered an organization exempt from income taxes 
for the purpose of any law which refers to organizations exempt 
from income taxes.
  (c) List of exempt organizations.--The following 
organizations are referred to in subsection (a):
          (1) Any corporation organized under Act of Congress 
        which is an instrumentality of the United States but 
        only if such corporation--
                  (A) is exempt from Federal income taxes--
                          (i) under such Act as amended and 
                        supplemented before July 18, 1984, or
                          (ii) under this title without regard 
                        to any provision of law which is not 
                        contained in this title and which is 
                        not contained in a revenue Act, or
                  (B) is described in subsection (l).
          (2) Corporations organized for the exclusive purpose 
        of holding title to property, collecting income 
        therefrom, and turning over the entire amount thereof, 
        less expenses, to an organization which itself is 
        exempt under this section. Rules similar to the rules 
        of subparagraph (G) of paragraph (25) shall apply for 
        purposes of this paragraph.
          (3) Corporations, and 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 (except as otherwise provided in subsection 
        (h)), 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.
          (4)(A) Civic 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.
          (B) Subparagraph (A) shall not apply to an entity 
        unless no part of the net earnings of such entity 
        inures to the benefit of any private shareholder or 
        individual.
          (5) Labor, agricultural, or horticultural 
        organizations.
          (6) Business leagues, chambers of commerce, real-
        estate boards, boards of trade, or professional 
        football leagues (whether or not administering a 
        pension fund for football players), not organized for 
        profit and no part of the net earnings of which inures 
        to the benefit of any private shareholder or 
        individual.
          (7) Clubs organized for pleasure, recreation, and 
        other nonprofitable purposes, substantially all of the 
        activities of which are for such purposes and no part 
        of the net earnings of which inures to the benefit of 
        any private shareholder.
          (8) Fraternal beneficiary societies, orders, or 
        associations--
                  (A) operating under the lodge system or for 
                the exclusive benefit of the members of a 
                fraternity itself operating under the lodge 
                system, and
                  (B) providing for the payment of life, sick, 
                accident, or other benefits to the members of 
                such society, order, or association or their 
                dependents.
          (9) Voluntary employees' beneficiary associations 
        providing for the payment of life, sick, accident, or 
        other benefits to the members of such association or 
        their dependents or designated beneficiaries, if no 
        part of the net earnings of such association inures 
        (other than through such payments) to the benefit of 
        any private shareholder or individual. For purposes of 
        providing for the payment of sick and accident benefits 
        to members of such an association and their dependents, 
        the term ``dependent'' shall include any individual who 
        is a child (as defined in section 152(f)(1)) of a 
        member who as of the end of the calendar year has not 
        attained age 27.
          (10) Domestic fraternal societies, orders, or 
        associations, operating under the lodge system--
                  (A) the net earnings of which are devoted 
                exclusively to religious, charitable, 
                scientific, literary, educational, and 
                fraternal purposes, and
                  (B) which do not provide for the payment of 
                life, sick, accident, or other benefits.
          (11) Teachers' retirement fund associations of a 
        purely local character, if--
                  (A) no part of their net earnings inures 
                (other than through payment of retirement 
                benefits) to the benefit of any private 
                shareholder or individual, and
                  (B) the income consists solely of amounts 
                received from public taxation, amounts received 
                from assessments on the teaching salaries of 
                members, and income in respect of investments.
          (12)(A) Benevolent life insurance associations of a 
        purely local character, mutual ditch or irrigation 
        companies, mutual or cooperative telephone companies, 
        or like organizations; but only if 85 percent or more 
        of the income consists of amounts collected from 
        members for the sole purpose of meeting losses and 
        expenses.
          (B) In the case of a mutual or cooperative telephone 
        company, subparagraph (A) shall be applied without 
        taking into account any income received or accrued--
                  (i) from a nonmember telephone company for 
                the performance of communication services which 
                involve members of the mutual or cooperative 
                telephone company,
                  (ii) from qualified pole rentals,
                  (iii) from the sale of display listings in a 
                directory furnished to the members of the 
                mutual or cooperative telephone company, or
                  (iv) from the prepayment of a loan under 
                section 306A, 306B, or 311 of the Rural 
                Electrification Act of 1936 (as in effect on 
                January 1, 1987).
          (C) In the case of a mutual or cooperative electric 
        company, subparagraph (A) shall be applied without 
        taking into account any income received or accrued--
                  (i) from qualified pole rentals, or
                  (ii) from any provision or sale of electric 
                energy transmission services or ancillary 
                services if such services are provided on a 
                nondiscriminatory open access basis under an 
                open access transmission tariff approved or 
                accepted by FERC or under an independent 
                transmission provider agreement approved or 
                accepted by FERC (other than income received or 
                accrued directly or indirectly from a member),
                  (iii) from the provision or sale of electric 
                energy distribution services or ancillary 
                services if such services are provided on a 
                nondiscriminatory open access basis to 
                distribute electric energy not owned by the 
                mutual or electric cooperative company--
                          (I) to end-users who are served by 
                        distribution facilities not owned by 
                        such company or any of its members 
                        (other than income received or accrued 
                        directly or indirectly from a member), 
                        or
                          (II) generated by a generation 
                        facility not owned or leased by such 
                        company or any of its members and which 
                        is directly connected to distribution 
                        facilities owned by such company or any 
                        of its members (other than income 
                        received or accrued directly or 
                        indirectly from a member),
                  (iv) from any nuclear decommissioning 
                transaction, or
                  (v) from any asset exchange or conversion 
                transaction.
          (D) For purposes of this paragraph, the term 
        ``qualified pole rental'' means any rental of a pole 
        (or other structure used to support wires) if such pole 
        (or other structure)--
                  (i) is used by the telephone or electric 
                company to support one or more wires which are 
                used by such company in providing telephone or 
                electric services to its members, and
                  (ii) is used pursuant to the rental to 
                support one or more wires (in addition to the 
                wires described in clause (i)) for use in 
                connection with the transmission by wire of 
                electricity or of telephone or other 
                communications.
For purposes of the preceding sentence, the term ``rental'' 
includes any sale of the right to use the pole (or other 
structure).
          (E) For purposes of subparagraph (C)(ii), the term 
        ``FERC'' means--
                  (i) the Federal Energy Regulatory Commission, 
                or
                  (ii) in the case of any utility with respect 
                to which all of the electricity generated, 
                transmitted, or distributed by such utility is 
                generated, transmitted, distributed, and 
                consumed in the same State, the State agency of 
                such State with the authority to regulate 
                electric utilities.
          (F) For purposes of subparagraph (C)(iv), the term 
        ``nuclear decommissioning transaction'' means--
                  (i) any transfer into a trust, fund, or 
                instrument established to pay any nuclear 
                decommissioning costs if the transfer is in 
                connection with the transfer of the mutual or 
                cooperative electric company's interest in a 
                nuclear power plant or nuclear power plant 
                unit,
                  (ii) any distribution from any trust, fund, 
                or instrument established to pay any nuclear 
                decommissioning costs, or
                  (iii) any earnings from any trust, fund, or 
                instrument established to pay any nuclear 
                decommissioning costs.
          (G) For purposes of subparagraph (C)(v), the term 
        ``asset exchange or conversion transaction'' means any 
        voluntary exchange or involuntary conversion of any 
        property related to generating, transmitting, 
        distributing, or selling electric energy by a mutual or 
        cooperative electric company, the gain from which 
        qualifies for deferred recognition under section 1031 
        or 1033, but only if the replacement property acquired 
        by such company pursuant to such section constitutes 
        property which is used, or to be used, for--
                  (i) generating, transmitting, distributing, 
                or selling electric energy, or
                  (ii) producing, transmitting, distributing, 
                or selling natural gas.
          (H)(i) In the case of a mutual or cooperative 
        electric company described in this paragraph or an 
        organization described in section 1381(a)(2)(C), income 
        received or accrued from a load loss transaction shall 
        be treated as an amount collected from members for the 
        sole purpose of meeting losses and expenses.
          (ii) For purposes of clause (i), the term ``load loss 
        transaction'' means any wholesale or retail sale of 
        electric energy (other than to members) to the extent 
        that the aggregate sales during the recovery period do 
        not exceed the load loss mitigation sales limit for 
        such period.
          (iii) For purposes of clause (ii), the load loss 
        mitigation sales limit for the recovery period is the 
        sum of the annual load losses for each year of such 
        period.
          (iv) For purposes of clause (iii), a mutual or 
        cooperative electric company's annual load loss for 
        each year of the recovery period is the amount (if any) 
        by which--
                  (I) the megawatt hours of electric energy 
                sold during such year to members of such 
                electric company are less than
                  (II) the megawatt hours of electric energy 
                sold during the base year to such members.
          (v) For purposes of clause (iv)(II), the term ``base 
        year'' means--
                  (I) the calendar year preceding the start-up 
                year, or
                  (II) at the election of the mutual or 
                cooperative electric company, the second or 
                third calendar years preceding the start-up 
                year.
          (vi) For purposes of this subparagraph, the recovery 
        period is the 7-year period beginning with the start-up 
        year.
          (vii) For purposes of this subparagraph, the start-up 
        year is the first year that the mutual or cooperative 
        electric company offers nondiscriminatory open access 
        or the calendar year which includes the date of the 
        enactment of this subparagraph, if later, at the 
        election of such company.
          (viii) A company shall not fail to be treated as a 
        mutual or cooperative electric company for purposes of 
        this paragraph or as a corporation operating on a 
        cooperative basis for purposes of section 1381(a)(2)(C) 
        by reason of the treatment under clause (i).
          (ix) For purposes of subparagraph (A), in the case of 
        a mutual or cooperative electric company, income 
        received, or accrued, indirectly from a member shall be 
        treated as an amount collected from members for the 
        sole purpose of meeting losses and expenses.
          (I) In the case of a mutual or cooperative electric 
        company described in this paragraph or an organization 
        described in section 1381(a)(2), income received or 
        accrued in connection with an election under section 
        45J(e)(1) shall be treated as an amount collected from 
        members for the sole purpose of meeting losses and 
        expenses.
          (J) In the case of a mutual or cooperative telephone 
        or electric company described in this paragraph, 
        subparagraph (A) shall be applied without taking into 
        account any income received or accrued from--
                  (i) any grant, contribution, or assistance 
                provided pursuant to the Robert T. Stafford 
                Disaster Relief and Emergency Assistance Act or 
                any similar grant, contribution, or assistance 
                by any local, State, or regional governmental 
                entity for the purpose of relief, recovery, or 
                restoration from, or preparation for, a 
                disaster or emergency, or
                  (ii) any grant or contribution by any 
                governmental entity (other than a contribution 
                in aid of construction or any other 
                contribution as a customer or potential 
                customer) the purpose of which is substantially 
                related to providing, constructing, restoring, 
                or relocating electric, communication, 
                broadband, internet, or other utility 
                facilities or services.
          (13) Cemetery companies owned and operated 
        exclusively for the benefit of their members or which 
        are not operated for profit; and any corporation 
        chartered solely for the purpose of the disposal of 
        bodies by burial or cremation which is not permitted by 
        its charter to engage in any business not necessarily 
        incident to that purpose and no part of the net 
        earnings of which inures to the benefit of any private 
        shareholder or individual.
          (14)(A) Credit unions without capital stock organized 
        and operated for mutual purposes and without profit.
          (B) Corporations or associations without capital 
        stock organized before September 1, 1957, and operated 
        for mutual purposes and without profit for the purpose 
        of providing reserve funds for, and insurance of shares 
        or deposits in--
                  (i) domestic building and loan associations,
                  (ii) cooperative banks without capital stock 
                organized and operated for mutual purposes and 
                without profit,
                  (iii) mutual savings banks not having capital 
                stock represented by shares, or
                  (iv) mutual savings banks described in 
                section 591(b).
          (C) Corporations or associations organized before 
        September 1, 1957, and operated for mutual purposes and 
        without profit for the purpose of providing reserve 
        funds for associations or banks described in clause 
        (i), (ii), or (iii) of subparagraph (B); but only if 85 
        percent or more of the income is attributable to 
        providing such reserve funds and to investments. This 
        subparagraph shall not apply to any corporation or 
        association entitled to exemption under subparagraph 
        (B).
          (15)(A) Insurance companies (as defined in section 
        816(a)) other than life (including interinsurers and 
        reciprocal underwriters) if--
                  (i)(I) the gross receipts for the taxable 
                year do not exceed $600,000, and
                  (II) more than 50 percent of such gross 
                receipts consist of premiums, or
                  (ii) in the case of a mutual insurance 
                company--
                          (I) the gross receipts of which for 
                        the taxable year do not exceed 
                        $150,000, and
                          (II) more than 35 percent of such 
                        gross receipts consist of premiums.
        Clause (ii) shall not apply to a company if any 
        employee of the company, or a member of the employee's 
        family (as defined in section 2032A(e)(2)), is an 
        employee of another company exempt from taxation by 
        reason of this paragraph (or would be so exempt but for 
        this sentence).
          (B) For purposes of subparagraph (A), in determining 
        whether any company or association is described in 
        subparagraph (A), such company or association shall be 
        treated as receiving during the taxable year amounts 
        described in subparagraph (A) which are received during 
        such year by all other companies or associations which 
        are members of the same controlled group as the 
        insurance company or association for which the 
        determination is being made.
          (C) For purposes of subparagraph (B), the term 
        ``controlled group'' has the meaning given such term by 
        section 831(b)(2)(B)(ii), except that in applying 
        section 831(b)(2)(B)(ii) for purposes of this 
        subparagraph, subparagraphs (B) and (C) of section 
        1563(b)(2) shall be disregarded.
          (16) Corporations organized by an association subject 
        to part IV of this subchapter or members thereof, for 
        the purpose of financing the ordinary crop operations 
        of such members or other producers, and operated in 
        conjunction with such association. Exemption shall not 
        be denied any such corporation because it has capital 
        stock, if the dividend rate of such stock is fixed at 
        not to exceed the legal rate of interest in the State 
        of incorporation or 8 percent per annum, whichever is 
        greater, on the value of the consideration for which 
        the stock was issued, and if substantially all such 
        stock (other than nonvoting preferred stock, the owners 
        of which are not entitled or permitted to participate, 
        directly or indirectly, in the profits of the 
        corporation, on dissolution or otherwise, beyond the 
        fixed dividends) is owned by such association, or 
        members thereof; nor shall exemption be denied any such 
        corporation because there is accumulated and maintained 
        by it a reserve required by State law or a reasonable 
        reserve for any necessary purpose.
          (17)(A) A trust or trusts forming part of a plan 
        providing for the payment of supplemental unemployment 
        compensation benefits, if--
                  (i) under the plan, it is impossible, at any 
                time prior to the satisfaction of all 
                liabilities, with respect to employees under 
                the plan, for any part of the corpus or income 
                to be (within the taxable year or thereafter) 
                used for, or diverted to, any purpose other 
                than the providing of supplemental unemployment 
                compensation benefits,
                  (ii) such benefits are payable to employees 
                under a classification which is set forth in 
                the plan and which is found by the Secretary 
                not to be discriminatory in favor of employees 
                who are highly compensated employees (within 
                the meaning of section 414(q)), and
                  (iii) such benefits do not discriminate in 
                favor of employees who are highly compensated 
                employees (within the meaning of section 
                414(q)). A plan shall not be considered 
                discriminatory within the meaning of this 
                clause merely because the benefits received 
                under the plan bear a uniform relationship to 
                the total compensation, or the basic or regular 
                rate of compensation, of the employees covered 
                by the plan.
          (B) In determining whether a plan meets the 
        requirements of subparagraph (A), any benefits provided 
        under any other plan shall not be taken into 
        consideration, except that a plan shall not be 
        considered discriminatory--
                  (i) merely because the benefits under the 
                plan which are first determined in a 
                nondiscriminatory manner within the meaning of 
                subparagraph (A) are then reduced by any sick, 
                accident, or unemployment compensation benefits 
                received under State or Federal law (or reduced 
                by a portion of such benefits if determined in 
                a nondiscriminatory manner), or
                  (ii) merely because the plan provides only 
                for employees who are not eligible to receive 
                sick, accident, or unemployment compensation 
                benefits under State or Federal law the same 
                benefits (or a portion of such benefits if 
                determined in a nondiscriminatory manner) which 
                such employees would receive under such laws if 
                such employees were eligible for such benefits, 
                or
                  (iii) merely because the plan provides only 
                for employees who are not eligible under 
                another plan (which meets the requirements of 
                subparagraph (A)) of supplemental unemployment 
                compensation benefits provided wholly by the 
                employer the same benefits (or a portion of 
                such benefits if determined in a 
                nondiscriminatory manner) which such employees 
                would receive under such other plan if such 
                employees were eligible under such other plan, 
                but only if the employees eligible under both 
                plans would make a classification which would 
                be nondiscriminatory within the meaning of 
                subparagraph (A).
          (C) A plan shall be considered to meet the 
        requirements of subparagraph (A) during the whole of 
        any year of the plan if on one day in each quarter it 
        satisfies such requirements.
          (D) The term ``supplemental unemployment compensation 
        benefits'' means only--
                  (i) benefits which are paid to an employee 
                because of his involuntary separation from the 
                employment of the employer (whether or not such 
                separation is temporary) resulting directly 
                from a reduction in force, the discontinuance 
                of a plant or operation, or other similar 
                conditions, and
                  (ii) sick and accident benefits subordinate 
                to the benefits described in clause (i).
          (E) Exemption shall not be denied under subsection 
        (a) to any organization entitled to such exemption as 
        an association described in paragraph (9) of this 
        subsection merely because such organization provides 
        for the payment of supplemental unemployment benefits 
        (as defined in subparagraph (D)(i)).
          (18) A trust or trusts created before June 25, 1959, 
        forming part of a plan providing for the payment of 
        benefits under a pension plan funded only by 
        contributions of employees, if--
                  (A) under the plan, it is impossible, at any 
                time prior to the satisfaction of all 
                liabilities with respect to employees under the 
                plan, for any part of the corpus or income to 
                be (within the taxable year or thereafter) used 
                for, or diverted to, any purpose other than the 
                providing of benefits under the plan,
                  (B) such benefits are payable to employees 
                under a classification which is set forth in 
                the plan and which is found by the Secretary 
                not to be discriminatory in favor of employees 
                who are highly compensated employees (within 
                the meaning of section 414(q)),
                  (C) such benefits do not discriminate in 
                favor of employees who are highly compensated 
                employees (within the meaning of section 
                414(q)). A plan shall not be considered 
                discriminatory within the meaning of this 
                subparagraph merely because the benefits 
                received under the plan bear a uniform 
                relationship to the total compensation, or the 
                basic or regular rate of compensation, of the 
                employees covered by the plan, and
                  (D) in the case of a plan under which an 
                employee may designate certain contributions as 
                deductible--
                          (i) such contributions do not exceed 
                        the amount with respect to which a 
                        deduction is allowable under section 
                        219(b)(3),
                          (ii) requirements similar to the 
                        requirements of section 
                        401(k)(3)(A)(ii) are met with respect 
                        to such elective contributions,
                          (iii) such contributions are treated 
                        as elective deferrals for purposes of 
                        section 402(g), and
                          (iv) the requirements of section 
                        401(a)(30) are met.
        For purposes of subparagraph (D)(ii), rules similar to 
        the rules of section 401(k)(8) shall apply. For 
        purposes of section 4979, any excess contribution under 
        clause (ii) shall be treated as an excess contribution 
        under a cash or deferred arrangement.
          (19) A post or organization of past or present 
        members of the Armed Forces of the United States, or an 
        auxiliary unit or society of, or a trust or foundation 
        for, any such post or organization--
                  (A) organized in the United States or any of 
                its possessions,
                  (B) at least 75 percent of the members of 
                which are past or present members of the Armed 
                Forces of the United States and substantially 
                all of the other members of which are 
                individuals who are cadets or are spouses, 
                widows, widowers, ancestors, or lineal 
                descendants of past or present members of the 
                Armed Forces of the United States or of cadets, 
                and
                  (C) no part of the net earnings of which 
                inures to the benefit of any private 
                shareholder or individual.
          (21)(A) A trust or trusts established in writing, 
        created or organized in the United States, and 
        contributed to by any person (except an insurance 
        company) if--
                  (i) the purpose of such trust or trusts is 
                exclusively--
                          (I) to satisfy, in whole or in part, 
                        the liability of such person for, or 
                        with respect to, claims for 
                        compensation for disability or death 
                        due to pneumoconiosis under Black Lung 
                        Acts,
                          (II) to pay premiums for insurance 
                        exclusively covering such liability,
                          (III) to pay administrative and other 
                        incidental expenses of such trust in 
                        connection with the operation of the 
                        trust and the processing of claims 
                        against such person under Black Lung 
                        Acts, and
                          (IV) to pay accident or health 
                        benefits for retired miners and their 
                        spouses and dependents (including 
                        administrative and other incidental 
                        expenses of such trust in connection 
                        therewith) or premiums for insurance 
                        exclusively covering such benefits; and
                  (ii) no part of the assets of the trust may 
                be used for, or diverted to, any purpose other 
                than--
                          (I) the purposes described in clause 
                        (i),
                          (II) investment (but only to the 
                        extent that the trustee determines that 
                        a portion of the assets is not 
                        currently needed for the purposes 
                        described in clause (i)) in qualified 
                        investments, or
                          (III) payment into the Black Lung 
                        Disability Trust Fund established under 
                        section 9501, or into the general fund 
                        of the United States Treasury (other 
                        than in satisfaction of any tax or 
                        other civil or criminal liability of 
                        the person who established or 
                        contributed to the trust).
          (B) No deduction shall be allowed under this chapter 
        for any payment described in subparagraph (A)(i)(IV) 
        from such trust.
          (C) Payments described in subparagraph (A)(i)(IV) may 
        be made from such trust during a taxable year only to 
        the extent that the aggregate amount of such payments 
        during such taxable year does not exceed the excess (if 
        any), as of the close of the preceding taxable year, 
        of--
                  (i) the fair market value of the assets of 
                the trust, over
                  (ii) 110 percent of the present value of the 
                liability described in subparagraph (A)(i)(I) 
                of such person.
The determinations under the preceding sentence shall be made 
by an independent actuary using actuarial methods and 
assumptions (not inconsistent with the regulations prescribed 
under section 192(c)(1)(A)) each of which is reasonable and 
which are reasonable in the aggregate.
          (D) For purposes of this paragraph:
                  (i) The term ``Black Lung Acts'' means part C 
                of title IV of the Federal Mine Safety and 
                Health Act of 1977, and any State law providing 
                compensation for disability or death due to 
                that pneumoconiosis.
                  (ii) The term ``qualified investments'' 
                means--
                          (I) public debt securities of the 
                        United States,
                          (II) obligations of a State or local 
                        government which are not in default as 
                        to principal or interest, and
                          (III) time or demand deposits in a 
                        bank (as defined in section 581) or an 
                        insured credit union (within the 
                        meaning of section 101(7) of the 
                        Federal Credit Union Act, 12 U.S.C. 
                        1752(7)) located in the United States.
                  (iii) The term ``miner'' has the same meaning 
                as such term has when used in section 402(d) of 
                the Black Lung Benefits Act (30 U.S.C. 902(d)).
                  (iv) The term ``incidental expenses'' 
                includes legal, accounting, actuarial, and 
                trustee expenses.
          (22) A trust created or organized in the United 
        States and established in writing by the plan sponsors 
        of multiemployer plans if--
                  (A) the purpose of such trust is 
                exclusively--
                          (i) to pay any amount described in 
                        section 4223(c) or (h) of the Employee 
                        Retirement Income Security Act of 1974, 
                        and
                          (ii) to pay reasonable and necessary 
                        administrative expenses in connection 
                        with the establishment and operation of 
                        the trust and the processing of claims 
                        against the trust,
                  (B) no part of the assets of the trust may be 
                used for, or diverted to, any purpose other 
                than--
                          (i) the purposes described in 
                        subparagraph (A), or
                          (ii) the investment in securities, 
                        obligations, or time or demand deposits 
                        described in clause (ii) of paragraph 
                        (21)(D),
                  (C) such trust meets the requirements of 
                paragraphs (2), (3), and (4) of section 
                4223(b), 4223(h), or, if applicable, section 
                4223(c) of the Employee Retirement Income 
                Security Act of 1974, and
                  (D) the trust instrument provides that, on 
                dissolution of the trust, assets of the trust 
                may not be paid other than to plans which have 
                participated in the plan or, in the case of a 
                trust established under section 4223(h) of such 
                Act, to plans with respect to which employers 
                have participated in the fund.
          (23) Any association organized before 1880 more than 
        75 percent of the members of which are present or past 
        members of the Armed Forces and a principal purpose of 
        which is to provide insurance and other benefits to 
        veterans or their dependents.
          (24) A trust described in section 4049 of the 
        Employee Retirement Income Security Act of 1974 (as in 
        effect on the date of the enactment of the Single-
        Employer Pension Plan Amendments Act of 1986).
          (25)(A) Any corporation or trust which--
                  (i) has no more than 35 shareholders or 
                beneficiaries,
                  (ii) has only 1 class of stock or beneficial 
                interest, and
                  (iii) is organized for the exclusive purposes 
                of--
                          (I) acquiring real property and 
                        holding title to, and collecting income 
                        from, such property, and
                          (II) remitting the entire amount of 
                        income from such property (less 
                        expenses) to 1 or more organizations 
                        described in subparagraph (C) which are 
                        shareholders of such corporation or 
                        beneficiaries of such trust.
        For purposes of clause (iii), the term ``real 
        property'' shall not include any interest as a tenant 
        in common (or similar interest) and shall not include 
        any indirect interest.
          (B) A corporation or trust shall be described in 
        subparagraph (A) without regard to whether the 
        corporation or trust is organized by 1 or more 
        organizations described in subparagraph (C).
          (C) An organization is described in this subparagraph 
        if such organization is--
                  (i) a qualified pension, profit sharing, or 
                stock bonus plan that meets the requirements of 
                section 401(a),
                  (ii) a governmental plan (within the meaning 
                of section 414(d)),
                  (iii) the United States, any State or 
                political subdivision thereof, or any agency or 
                instrumentality of any of the foregoing, or
                  (iv) any organization described in paragraph 
                (3).
          (D) A corporation or trust shall in no event be 
        treated as described in subparagraph (A) unless such 
        corporation or trust permits its shareholders or 
        beneficiaries--
                  (i) to dismiss the corporation's or trust's 
                investment adviser, following reasonable 
                notice, upon a vote of the shareholders or 
                beneficiaries holding a majority of interest in 
                the corporation or trust, and
                  (ii) to terminate their interest in the 
                corporation or trust by either, or both, of the 
                following alternatives, as determined by the 
                corporation or trust:
                          (I) by selling or exchanging their 
                        stock in the corporation or interest in 
                        the trust (subject to any Federal or 
                        State securities law) to any 
                        organization described in subparagraph 
                        (C) so long as the sale or exchange 
                        does not increase the number of 
                        shareholders or beneficiaries in such 
                        corporation or trust above 35, or
                          (II) by having their stock or 
                        interest redeemed by the corporation or 
                        trust after the shareholder or 
                        beneficiary has provided 90 days notice 
                        to such corporation or trust.
          (E)(i) For purposes of this title--
                  (I) a corporation which is a qualified 
                subsidiary shall not be treated as a separate 
                corporation, and
                  (II) all assets, liabilities, and items of 
                income, deduction, and credit of a qualified 
                subsidiary shall be treated as assets, 
                liabilities, and such items (as the case may 
                be) of the corporation or trust described in 
                subparagraph (A).
          (ii) For purposes of this subparagraph, the term 
        ``qualified subsidiary'' means any corporation if, at 
        all times during the period such corporation was in 
        existence, 100 percent of the stock of such corporation 
        is held by the corporation or trust described in 
        subparagraph (A).
          (iii) For purposes of this subtitle, if any 
        corporation which was a qualified subsidiary ceases to 
        meet the requirements of clause (ii), such corporation 
        shall be treated as a new corporation acquiring all of 
        its assets (and assuming all of its liabilities) 
        immediately before such cessation from the corporation 
        or trust described in subparagraph (A) in exchange for 
        its stock.
          (F) For purposes of subparagraph (A), the term ``real 
        property'' includes any personal property which is 
        leased under, or in connection with, a lease of real 
        property, but only if the rent attributable to such 
        personal property (determined under the rules of 
        section 856(d)(1)) for the taxable year does not exceed 
        15 percent of the total rent for the taxable year 
        attributable to both the real and personal property 
        leased under, or in connection with, such lease.
          (G)(i) An organization shall not be treated as 
        failing to be described in this paragraph merely by 
        reason of the receipt of any otherwise disqualifying 
        income which is incidentally derived from the holding 
        of real property.
          (ii) Clause (i) shall not apply if the amount of 
        gross income described in such clause exceeds 10 
        percent of the organization's gross income for the 
        taxable year unless the organization establishes to the 
        satisfaction of the Secretary that the receipt of gross 
        income described in clause (i) in excess of such 
        limitation was inadvertent and reasonable steps are 
        being taken to correct the circumstances giving rise to 
        such income.
          (26) Any membership organization if--
                  (A) such organization is established by a 
                State exclusively to provide coverage for 
                medical care (as defined in section 213(d)) on 
                a not-for-profit basis to individuals described 
                in subparagraph (B) through--
                          (i) insurance issued by the 
                        organization, or
                          (ii) a health maintenance 
                        organization under an arrangement with 
                        the organization,
                  (B) the only individuals receiving such 
                coverage through the organization are 
                individuals--
                          (i) who are residents of such State, 
                        and
                          (ii) who, by reason of the existence 
                        or history of a medical condition--
                                  (I) are unable to acquire 
                                medical care coverage for such 
                                condition through insurance or 
                                from a health maintenance 
                                organization, or
                                  (II) are able to acquire such 
                                coverage only at a rate which 
                                is substantially in excess of 
                                the rate for such coverage 
                                through the membership 
                                organization,
                  (C) the composition of the membership in such 
                organization is specified by such State, and
                  (D) no part of the net earnings of the 
                organization inures to the benefit of any 
                private shareholder or individual.
        A spouse and any qualifying child (as defined in 
        section 24(c)) of an individual described in 
        subparagraph (B) (without regard to this sentence) 
        shall be treated as described in subparagraph (B).
          (27)(A) Any membership organization if--
                  (i) such organization is established before 
                June 1, 1996, by a State exclusively to 
                reimburse its members for losses arising under 
                workmen's compensation acts,
                  (ii) such State requires that the membership 
                of such organization consist of--
                          (I) all persons who issue insurance 
                        covering workmen's compensation losses 
                        in such State, and
                          (II) all persons and governmental 
                        entities who self-insure against such 
                        losses, and
                  (iii) such organization operates as a non-
                profit organization by--
                          (I) returning surplus income to its 
                        members or workmen's compensation 
                        policyholders on a periodic basis, and
                          (II) reducing initial premiums in 
                        anticipation of investment income.
          (B) Any organization (including a mutual insurance 
        company) if--
                  (i) such organization is created by State law 
                and is organized and operated under State law 
                exclusively to--
                          (I) provide workmen's compensation 
                        insurance which is required by State 
                        law or with respect to which State law 
                        provides significant disincentives if 
                        such insurance is not purchased by an 
                        employer, and
                          (II) provide related coverage which 
                        is incidental to workmen's compensation 
                        insurance,
                  (ii) such organization must provide workmen's 
                compensation insurance to any employer in the 
                State (for employees in the State or 
                temporarily assigned out-of-State) which seeks 
                such insurance and meets other reasonable 
                requirements relating thereto,
                  (iii)(I) the State makes a financial 
                commitment with respect to such organization 
                either by extending the full faith and credit 
                of the State to the initial debt of such 
                organization or by providing the initial 
                operating capital of such organization, and 
                (II) in the case of periods after the date of 
                enactment of this subparagraph, the assets of 
                such organization revert to the State upon 
                dissolution or State law does not permit the 
                dissolution of such organization, and
                  (iv) the majority of the board of directors 
                or oversight body of such organization are 
                appointed by the chief executive officer or 
                other executive branch official of the State, 
                by the State legislature, or by both.
          (28) The National Railroad Retirement Investment 
        Trust established under section 15(j) of the Railroad 
        Retirement Act of 1974.
          (29) CO-OP health insurance issuers.--
                  (A) In general.--A qualified nonprofit health 
                insurance issuer (within the meaning of section 
                1322 of the Patient Protection and Affordable 
                Care Act) which has received a loan or grant 
                under the CO-OP program under such section, but 
                only with respect to periods for which the 
                issuer is in compliance with the requirements 
                of such section and any agreement with respect 
                to the loan or grant.
                  (B) Conditions for exemption.--Subparagraph 
                (A) shall apply to an organization only if--
                          (i) the organization has given notice 
                        to the Secretary, in such manner as the 
                        Secretary may by regulations prescribe, 
                        that it is applying for recognition of 
                        its status under this paragraph,
                          (ii) except as provided in section 
                        1322(c)(4) of the Patient Protection 
                        and Affordable Care Act, no part of the 
                        net earnings of which inures to the 
                        benefit of any private shareholder or 
                        individual,
                          (iii) no substantial part of the 
                        activities of which is carrying on 
                        propaganda, or otherwise attempting, to 
                        influence legislation, and
                          (iv) the organization 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.
  (d) Religious and apostolic organizations.--The following 
organizations are referred to in subsection (a): Religious or 
apostolic associations or corporations, if such associations or 
corporations have a common treasury or community treasury, even 
if such associations or corporations engage in business for the 
common benefit of the members, but only if the members thereof 
include (at the time of filing their returns) in their gross 
income their entire pro rata shares, whether distributed or 
not, of the taxable income of the association or corporation 
for such year. Any amount so included in the gross income of a 
member shall be treated as a dividend received.
  (e) Cooperative hospital service organizations.--For purposes 
of this title, an organization shall be treated as an 
organization organized and operated exclusively for charitable 
purposes, if--
          (1) such organization is organized and operated 
        solely--
                  (A) to perform, on a centralized basis, one 
                or more of the following services which, if 
                performed on its own behalf by a hospital which 
                is an organization described in subsection 
                (c)(3) and exempt from taxation under 
                subsection (a), would constitute activities in 
                exercising or performing the purpose or 
                function constituting the basis for its 
                exemption: data processing, purchasing 
                (including the purchasing of insurance on a 
                group basis), warehousing, billing and 
                collection (including the purchase of patron 
                accounts receivable on a recourse basis), food, 
                clinical, industrial engineering, laboratory, 
                printing, communications, record center, and 
                personnel (including selection, testing, 
                training, and education of personnel) services; 
                and
                  (B) to perform such services solely for two 
                or more hospitals each of which is--
                          (i) an organization described in 
                        subsection (c)(3) which is exempt from 
                        taxation under subsection (a),
                          (ii) a constituent part of an 
                        organization described in subsection 
                        (c)(3) which is exempt from taxation 
                        under subsection (a) and which, if 
                        organized and operated as a separate 
                        entity, would constitute an 
                        organization described in subsection 
                        (c)(3), or
                          (iii) owned and operated by the 
                        United States, a State, the District of 
                        Columbia, or a possession of the United 
                        States, or a political subdivision or 
                        an agency or instrumentality of any of 
                        the foregoing;
          (2) such organization is organized and operated on a 
        cooperative basis and allocates or pays, within 81/2 
        months after the close of its taxable year, all net 
        earnings to patrons on the basis of services performed 
        for them; and
          (3) if such organization has capital stock, all of 
        such stock outstanding is owned by its patrons.
For purposes of this title, any organization which, by reason 
of the preceding sentence, is an organization described in 
subsection (c)(3) and exempt from taxation under subsection 
(a), shall be treated as a hospital and as an organization 
referred to in section 170(b)(1)(A)(iii).
  (f) Cooperative service organizations of operating 
educational organizations.--For purposes of this title, if an 
organization is--
          (1) organized and operated solely to hold, commingle, 
        and collectively invest and reinvest (including 
        arranging for and supervising the performance by 
        independent contractors of investment services related 
        thereto) in stocks and securities, the moneys 
        contributed thereto by each of the members of such 
        organization, and to collect income therefrom and turn 
        over the entire amount thereof, less expenses, to such 
        members,
          (2) organized and controlled by one or more such 
        members, and
          (3) comprised solely of members that are 
        organizations described in clause (ii) or (iv) of 
        section 170(b)(1)(A)--
                  (A) which are exempt from taxation under 
                subsection (a), or
                  (B) the income of which is excluded from 
                taxation under section 115,
        then such organization shall be treated as an 
        organization organized and operated exclusively for 
        charitable purposes.
  (g) Definition of agricultural.--For purposes of subsection 
(c)(5), the term ``agricultural'' includes the art or science 
of cultivating land, harvesting crops or aquatic resources, or 
raising livestock.
  (h) Expenditures by public charities to influence 
legislation.--
          (1) General rule.--In the case of an organization to 
        which this subsection applies, exemption from taxation 
        under subsection (a) shall be denied because a 
        substantial part of the activities of such organization 
        consists of carrying on propaganda, or otherwise 
        attempting, to influence legislation, but only if such 
        organization normally--
                  (A) makes lobbying expenditures in excess of 
                the lobbying ceiling amount for such 
                organization for each taxable year, or
                  (B) makes grass roots expenditures in excess 
                of the grass roots ceiling amount for such 
                organization for each taxable year.
          (2) Definitions.--For purposes of this subsection--
                  (A) Lobbying expenditures.--The term 
                ``lobbying expenditures'' means expenditures 
                for the purpose of influencing legislation (as 
                defined in section 4911(d)).
                  (B) Lobbying ceiling amount.--The lobbying 
                ceiling amount for any organization for any 
                taxable year is 150 percent of the lobbying 
                nontaxable amount for such organization for 
                such taxable year, determined under section 
                4911.
                  (C) Grass roots expenditures.--The term 
                ``grass roots expenditures'' means expenditures 
                for the purpose of influencing legislation (as 
                defined in section 4911(d) without regard to 
                paragraph (1)(B) thereof).
                  (D) Grass roots ceiling amount.--The grass 
                roots ceiling amount for any organization for 
                any taxable year is 150 percent of the grass 
                roots nontaxable amount for such organization 
                for such taxable year, determined under section 
                4911.
          (3) Organizations to which this subsection applies.--
        This subsection shall apply to any organization which 
        has elected (in such manner and at such time as the 
        Secretary may prescribe) to have the provisions of this 
        subsection apply to such organization and which, for 
        the taxable year which includes the date the election 
        is made, is described in subsection (c)(3) and--
                  (A) is described in paragraph (4), and
                  (B) is not a disqualified organization under 
                paragraph (5).
          (4) Organizations permitted to elect to have this 
        subsection apply.--An organization is described in this 
        paragraph if it is described in--
                  (A) section 170(b)(1)(A)(ii) (relating to 
                educational institutions),
                  (B) section 170(b)(1)(A)(iii) (relating to 
                hospitals and medical research organizations),
                  (C) section 170(b)(1)(A)(iv) (relating to 
                organizations supporting government schools),
                  (D) section 170(b)(1)(A)(vi) (relating to 
                organizations publicly supported by charitable 
                contributions),
                  (E) section 170(b)(1)(A)(ix) (relating to 
                agricultural research organizations),
                  (F) section 509(a)(2) (relating to 
                organizations publicly supported by admissions, 
                sales, etc.), or
                  (G) section 509(a)(3) (relating to 
                organizations supporting certain types of 
                public charities) except that for purposes of 
                this subparagraph, section 509(a)(3) shall be 
                applied without regard to the last sentence of 
                section 509(a).
          (5) Disqualified organizations.--For purposes of 
        paragraph (3) an organization is a disqualified 
        organization if it is--
                  (A) described in section 170(b)(1)(A)(i) 
                (relating to churches),
                  (B) an integrated auxiliary of a church or of 
                a convention or association of churches, or
                  (C) a member of an affiliated group of 
                organizations (within the meaning of section 
                4911(f)(2)) if one or more members of such 
                group is described in subparagraph (A) or (B).
          (6) Years for which election is effective.--An 
        election by an organization under this subsection shall 
        be effective for all taxable years of such organization 
        which--
                  (A) end after the date the election is made, 
                and
                  (B) begin before the date the election is 
                revoked by such organization (under regulations 
                prescribed by the Secretary).
          (7) No effect on certain organizations.--With respect 
        to any organization for a taxable year for which--
                  (A) such organization is a disqualified 
                organization (within the meaning of paragraph 
                (5)), or
                  (B) an election under this subsection is not 
                in effect for such organization,
        nothing in this subsection or in section 4911 shall be 
        construed to affect the interpretation of the phrase, 
        ``no substantial part of the activities of which is 
        carrying on propaganda, or otherwise attempting, to 
        influence legislation,'' under subsection (c)(3).
          (8) Affiliated organizations.--For rules regarding 
        affiliated organizations, see section 4911(f).
  (i) Prohibition of discrimination by certain social clubs.--
Notwithstanding subsection (a), an organization which is 
described in subsection (c)(7) shall not be exempt from 
taxation under subsection (a) for any taxable year if, at any 
time during such taxable year, the charter, bylaws, or other 
governing instrument, of such organization or any written 
policy statement of such organization contains a provision 
which provides for discrimination against any person on the 
basis of race, color, or religion. The preceding sentence to 
the extent it relates to discrimination on the basis of 
religion shall not apply to--
          (1) an auxiliary of a fraternal beneficiary society 
        if such society--
                  (A) is described in subsection (c)(8) and 
                exempt from tax under subsection (a), and
                  (B) limits its membership to the members of a 
                particular religion, or
          (2) a club which in good faith limits its membership 
        to the members of a particular religion in order to 
        further the teachings or principles of that religion, 
        and not to exclude individuals of a particular race or 
        color.
  (j) Special rules for certain amateur sports organizations.--
          (1) In general.--In the case of a qualified amateur 
        sports organization--
                  (A) the requirement of subsection (c)(3) that 
                no part of its activities involve the provision 
                of athletic facilities or equipment shall not 
                apply, and
                  (B) such organization shall not fail to meet 
                the requirements of subsection (c)(3) merely 
                because its membership is local or regional in 
                nature.
          (2) Qualified amateur sports organization defined.--
        For purposes of this subsection, the term ``qualified 
        amateur sports organization'' means any organization 
        organized and operated exclusively to foster national 
        or international amateur sports competition if such 
        organization is also organized and operated primarily 
        to conduct national or international competition in 
        sports or to support and develop amateur athletes for 
        national or international competition in sports.
  (k) Treatment of certain organizations providing child 
care.--For purposes of subsection (c)(3) of this section and 
sections 170(c)(2), 2055(a)(2), and 2522(a)(2), the term 
``educational purposes'' includes the providing of care of 
children away from their homes if--
          (1) substantially all of the care provided by the 
        organization is for purposes of enabling individuals to 
        be gainfully employed, and
          (2) the services provided by the organization are 
        available to the general public.
  (l) Government corporations exempt under subsection (c)(1).--
For purposes of subsection (c)(1), the following organizations 
are described in this subsection:
          (1) The Central Liquidity Facility established under 
        title III of the Federal Credit Union Act (12 U.S.C. 
        1795 et seq.).
          (2) The Resolution Trust Corporation established 
        under section 21A of the Federal Home Loan Bank Act.
          (3) The Resolution Funding Corporation established 
        under section 21B of the Federal Home Loan Bank Act.
          (4) The Patient-Centered Outcomes Research Institute 
        established under section 1181(b) of the Social 
        Security Act.
  (m) Certain organizations providing commercial-type insurance 
not exempt from tax.--
          (1) Denial of tax exemption where providing 
        commercial-type insurance is substantial part of 
        activities.--An organization described in paragraph (3) 
        or (4) of subsection (c) shall be exempt from tax under 
        subsection (a) only if no substantial part of its 
        activities consists of providing commercial-type 
        insurance.
          (2) Other organizations taxed as insurance companies 
        on insurance business.--In the case of an organization 
        described in paragraph (3) or (4) of subsection (c) 
        which is exempt from tax under subsection (a) after the 
        application of paragraph (1) of this subsection--
                  (A) the activity of providing commercial-type 
                insurance shall be treated as an unrelated 
                trade or business (as defined in section 513), 
                and
                  (B) in lieu of the tax imposed by section 511 
                with respect to such activity, such 
                organization shall be treated as an insurance 
                company for purposes of applying subchapter L 
                with respect to such activity.
          (3) Commercial-type insurance.--For purposes of this 
        subsection, the term ``commercial-type insurance'' 
        shall not include--
                  (A) insurance provided at substantially below 
                cost to a class of charitable recipients,
                  (B) incidental health insurance provided by a 
                health maintenance organization of a kind 
                customarily provided by such organizations,
                  (C) property or casualty insurance provided 
                (directly or through an organization described 
                in section 414(e)(3)(B)(ii)) by a church or 
                convention or association of churches for such 
                church or convention or association of 
                churches,
                  (D) providing retirement or welfare benefits 
                (or both) by a church or a convention or 
                association of churches (directly or through an 
                organization described in section 414(e)(3)(A) 
                or 414(e)(3)(B)(ii)) for the employees 
                (including employees described in section 
                414(e)(3)(B)) of such church or convention or 
                association of churches or the beneficiaries of 
                such employees, and
                  (E) charitable gift annuities.
          (4) Insurance includes annuities.--For purposes of 
        this subsection, the issuance of annuity contracts 
        shall be treated as providing insurance.
          (5) Charitable gift annuity.--For purposes of 
        paragraph (3)(E), the term ``charitable gift annuity'' 
        means an annuity if--
                  (A) a portion of the amount paid in 
                connection with the issuance of the annuity is 
                allowable as a deduction under section 170 or 
                2055, and
                  (B) the annuity is described in section 
                514(c)(5) (determined as if any amount paid in 
                cash in connection with such issuance were 
                property).
  (n) Charitable risk pools.--
          (1) In general.--For purposes of this title--
                  (A) a qualified charitable risk pool shall be 
                treated as an organization organized and 
                operated exclusively for charitable purposes, 
                and
                  (B) subsection (m) shall not apply to a 
                qualified charitable risk pool.
          (2) Qualified charitable risk pool.--For purposes of 
        this subsection, the term ``qualified charitable risk 
        pool'' means any organization--
                  (A) which is organized and operated solely to 
                pool insurable risks of its members (other than 
                risks related to medical malpractice) and to 
                provide information to its members with respect 
                to loss control and risk management,
                  (B) which is comprised solely of members that 
                are organizations described in subsection 
                (c)(3) and exempt from tax under subsection 
                (a), and
                  (C) which meets the organizational 
                requirements of paragraph (3).
          (3) Organizational requirements.--An organization 
        (hereinafter in this subsection referred to as the 
        ``risk pool'') meets the organizational requirements of 
        this paragraph if--
                  (A) such risk pool is organized as a 
                nonprofit organization under State law 
                provisions authorizing risk pooling 
                arrangements for charitable organizations,
                  (B) such risk pool is exempt from any income 
                tax imposed by the State (or will be so exempt 
                after such pool qualifies as an organization 
                exempt from tax under this title),
                  (C) such risk pool has obtained at least 
                $1,000,000 in startup capital from nonmember 
                charitable organizations,
                  (D) such risk pool is controlled by a board 
                of directors elected by its members, and
                  (E) the organizational documents of such risk 
                pool require that--
                          (i) each member of such pool shall at 
                        all times be an organization described 
                        in subsection (c)(3) and exempt from 
                        tax under subsection (a),
                          (ii) any member which receives a 
                        final determination that it no longer 
                        qualifies as an organization described 
                        in subsection (c)(3) shall immediately 
                        notify the pool of such determination 
                        and the effective date of such 
                        determination, and
                          (iii) each policy of insurance issued 
                        by the risk pool shall provide that 
                        such policy will not cover the insured 
                        with respect to events occurring after 
                        the date such final determination was 
                        issued to the insured.
        An organization shall not cease to qualify as a 
        qualified charitable risk pool solely by reason of the 
        failure of any of its members to continue to be an 
        organization described in subsection (c)(3) if, within 
        a reasonable period of time after such pool is notified 
        as required under subparagraph (E)(ii), such pool takes 
        such action as may be reasonably necessary to remove 
        such member from such pool.
          (4) Other definitions.--For purposes of this 
        subsection--
                  (A) Startup capital.--The term ``startup 
                capital'' means any capital contributed to, and 
                any program-related investments (within the 
                meaning of section 4944(c)) made in, the risk 
                pool before such pool commences operations.
                  (B) Nonmember charitable organization.--The 
                term ``nonmember charitable organization'' 
                means any organization which is described in 
                subsection (c)(3) and exempt from tax under 
                subsection (a) and which is not a member of the 
                risk pool and does not benefit (directly or 
                indirectly) from the insurance coverage 
                provided by the pool to its members.
  (o) Treatment of hospitals participating in provider-
sponsored organizations.--An organization shall not fail to be 
treated as organized and operated exclusively for a charitable 
purpose for purposes of subsection (c)(3) solely because a 
hospital which is owned and operated by such organization 
participates in a provider-sponsored organization (as defined 
in section 1855(d) of the Social Security Act), whether or not 
the provider-sponsored organization is exempt from tax. For 
purposes of subsection (c)(3), any person with a material 
financial interest in such a provider-sponsored organization 
shall be treated as a private shareholder or individual with 
respect to the hospital.
  (p) Suspension of tax-exempt status of terrorist 
organizations.--
          (1) In general.--The exemption from tax under 
        subsection (a) with respect to any organization 
        described in paragraph (2), and the eligibility of any 
        organization described in paragraph (2) to apply for 
        recognition of exemption under subsection (a), shall be 
        suspended during the period described in paragraph (3).
          (2) Terrorist organizations.--An organization is 
        described in this paragraph if such organization is 
        designated or otherwise individually identified--
                  (A) under section 212(a)(3)(B)(vi)(II) or 219 
                of the Immigration and Nationality Act as a 
                terrorist organization or foreign terrorist 
                organization,
                  (B) in or pursuant to an Executive order 
                which is related to terrorism and issued under 
                the authority of the International Emergency 
                Economic Powers Act or section 5 of the United 
                Nations Participation Act of 1945 for the 
                purpose of imposing on such organization an 
                economic or other sanction, or
                  (C) in or pursuant to an Executive order 
                issued under the authority of any Federal law 
                if--
                          (i) the organization is designated or 
                        otherwise individually identified in or 
                        pursuant to such Executive order as 
                        supporting or engaging in terrorist 
                        activity (as defined in section 
                        212(a)(3)(B) of the Immigration and 
                        Nationality Act) or supporting 
                        terrorism (as defined in section 
                        140(d)(2) of the Foreign Relations 
                        Authorization Act, Fiscal Years 1988 
                        and 1989); and
                          (ii) such Executive order refers to 
                        this subsection.
          (3) Period of suspension.--With respect to any 
        organization described in paragraph (2), the period of 
        suspension--
                  (A) begins on the later of--
                          (i) the date of the first publication 
                        of a designation or identification 
                        described in paragraph (2) with respect 
                        to such organization, or
                          (ii) the date of the enactment of 
                        this subsection, and
                  (B) ends on the first date that all 
                designations and identifications described in 
                paragraph (2) with respect to such organization 
                are rescinded pursuant to the law or Executive 
                order under which such designation or 
                identification was made.
          (4) Denial of deduction.--No deduction shall be 
        allowed under any provision of this title, including 
        sections 170, 545(b)(2), 642(c), 2055, 2106(a)(2), and 
        2522, with respect to any contribution to an 
        organization described in paragraph (2) during the 
        period described in paragraph (3).
          (5) Denial of administrative or judicial challenge of 
        suspension or denial of deduction.--Notwithstanding 
        section 7428 or any other provision of law, no 
        organization or other person may challenge a suspension 
        under paragraph (1), a designation or identification 
        described in paragraph (2), the period of suspension 
        described in paragraph (3), or a denial of a deduction 
        under paragraph (4) in any administrative or judicial 
        proceeding relating to the Federal tax liability of 
        such organization or other person.
          (6) Erroneous designation.--
                  (A) In general.--If--
                          (i) the tax exemption of any 
                        organization described in paragraph (2) 
                        is suspended under paragraph (1),
                          (ii) each designation and 
                        identification described in paragraph 
                        (2) which has been made with respect to 
                        such organization is determined to be 
                        erroneous pursuant to the law or 
                        Executive order under which such 
                        designation or identification was made, 
                        and
                          (iii) the erroneous designations and 
                        identifications result in an 
                        overpayment of income tax for any 
                        taxable year by such organization,
                credit or refund (with interest) with respect 
                to such overpayment shall be made.
                  (B) Waiver of limitations.--If the credit or 
                refund of any overpayment of tax described in 
                subparagraph (A)(iii) is prevented at any time 
                by the operation of any law or rule of law 
                (including res judicata), such credit or refund 
                may nevertheless be allowed or made if the 
                claim therefor is filed before the close of the 
                1-year period beginning on the date of the last 
                determination described in subparagraph 
                (A)(ii).
          (7) Notice of suspensions.--If the tax exemption of 
        any organization is suspended under this subsection, 
        the Internal Revenue Service shall update the listings 
        of tax-exempt organizations and shall publish 
        appropriate notice to taxpayers of such suspension and 
        of the fact that contributions to such organization are 
        not deductible during the period of such suspension.
          (8) Application to terrorist supporting 
        organizations.--
                  (A) In general.--For purposes of this 
                subsection, in the case of any terrorist 
                supporting organization--
                          (i) such organization (and the 
                        designation of such organization under 
                        subparagraph (B)) shall be treated as 
                        described in paragraph (2), and
                          (ii) the period of suspension 
                        described in paragraph (3) with respect 
                        to such organization shall be treated 
                        as beginning on the date that the 
                        Secretary designates such organization 
                        under subparagraph (B) and ending on 
                        the date that the Secretary rescinds 
                        such designation under subparagraph 
                        (D).
                  (B) Terrorist supporting organization.--For 
                purposes of this paragraph, the term 
                ``terrorist supporting organization'' means any 
                organization which is designated by the 
                Secretary as having provided, during the 3-year 
                period ending on the date of such designation, 
                material support or resources (within the 
                meaning of section 2339B of title 18, United 
                States Code) to an organization described in 
                paragraph (2) (determined after the application 
                of this paragraph to such organization) in 
                excess of a de minimis amount.
                  (C) Designation procedure.--
                          (i) Notice requirement.--Prior to 
                        designating any organization as a 
                        terrorist supporting organization under 
                        subparagraph (B), the Secretary shall 
                        mail to the most recent mailing address 
                        provided by such organization on the 
                        organization's annual return or notice 
                        under section 6033 (or subsequent form 
                        indicating a change of address) a 
                        written notice which includes--
                                  (I) a statement that the 
                                Secretary will designate such 
                                organization as a terrorist 
                                supporting organization unless 
                                the organization satisfies the 
                                requirements of subclause (I) 
                                or (II) of clause (ii),
                                  (II) the name of the 
                                organization or organizations 
                                with respect to which the 
                                Secretary has determined such 
                                organization provided material 
                                support or sources as described 
                                in subparagraph (B), and
                                  (III) a description of such 
                                material support or resources 
                                to the extent consistent with 
                                national security and law 
                                enforcement interests.
                          (ii) Opportunity to cure.--In the 
                        case of any notice provided to an 
                        organization under clause (i), the 
                        Secretary shall, at the close of the 
                        90-day period beginning on the date 
                        that such notice was sent, designate 
                        such organization as a terrorist 
                        supporting organization under 
                        subparagraph (B) if (and only if) such 
                        organization has not (during such 
                        period)--
                                  (I) demonstrated to the 
                                satisfaction of the Secretary 
                                that such organization did not 
                                provide the material support or 
                                resources referred to in 
                                subparagraph (B), or
                                  (II) made reasonable efforts 
                                to have such support or 
                                resources returned to such 
                                organization and certified in 
                                writing to the Secretary that 
                                such organization will not 
                                provide any further support or 
                                resources to organizations 
                                described in paragraph (2).
                        A certification under subclause (II) 
                        shall not be treated as valid if the 
                        organization making such certification 
                        has provided any other such 
                        certification during the preceding 5 
                        years.
                  (D) Rescission.--The Secretary shall rescind 
                a designation under subparagraph (B) if (and 
                only if)--
                          (i) the Secretary determines that 
                        such designation was erroneous,
                          (ii) after the Secretary receives a 
                        written certification from an 
                        organization that such organization did 
                        not receive the notice described in 
                        subparagraph (C)(i)--
                                  (I) the Secretary determines 
                                that it is reasonable to 
                                believe that such organization 
                                did not receive such notice, 
                                and
                                  (II) such organization 
                                satisfies the requirements of 
                                subclause (I) or (II) of 
                                subparagraph (C)(ii) 
                                (determined after taking into 
                                account the last sentence 
                                thereof), or
                          (iii) the Secretary determines, with 
                        respect to all organizations to which 
                        the material support or resources 
                        referred to in subparagraph (B) were 
                        provided, the periods of suspension 
                        under paragraph (3) have ended.
                A certification described in the matter 
                preceding subclause (I) of clause (II) shall 
                not be treated as valid if the organization 
                making such certification has provided any 
                other such certification during the preceding 5 
                years.
                  (E) Administrative review by internal revenue 
                service independent office of appeals.--In the 
                case of the designation of an organization by 
                the Secretary as a terrorist supporting 
                organization under subparagraph (B), a dispute 
                regarding such designation shall be subject to 
                resolution by the Internal Revenue Service 
                Independent Office of Appeals under section 
                7803(e) in the same manner as if such 
                designation were made by the Internal Revenue 
                Service and paragraph (5) of this subsection 
                did not apply.
                  (F) Jurisdiction of united states courts.--
                Notwithstanding paragraph (5), the United 
                States district courts shall have exclusive 
                jurisdiction to review a final determination 
                with respect to an organization's designation 
                as a terrorist supporting organization under 
                subparagraph (B). In the case of any such 
                determination which was based on classified 
                information (as defined in section 1(a) of the 
                Classified Information Procedures Act), such 
                information may be submitted to the reviewing 
                court ex parte and in camera. For purposes of 
                this subparagraph, a determination with respect 
                to an organization's designation as a terrorist 
                supporting organization shall not fail to be 
                treated as a final determination merely because 
                such organization fails to utilize the dispute 
                resolution process of the Internal Revenue 
                Service Independent Office of Appeals provided 
                under subparagraph (E).
  (q) Special rules for credit counseling organizations.--
          (1) In general.--An organization with respect to 
        which the provision of credit counseling services is a 
        substantial purpose shall not be exempt from tax under 
        subsection (a) unless such organization is described in 
        paragraph (3) or (4) of subsection (c) and such 
        organization is organized and operated in accordance 
        with the following requirements:
                  (A) The organization--
                          (i) provides credit counseling 
                        services tailored to the specific needs 
                        and circumstances of consumers,
                          (ii) makes no loans to debtors (other 
                        than loans with no fees or interest) 
                        and does not negotiate the making of 
                        loans on behalf of debtors,
                          (iii) provides services for the 
                        purpose of improving a consumer's 
                        credit record, credit history, or 
                        credit rating only to the extent that 
                        such services are incidental to 
                        providing credit counseling services, 
                        and
                          (iv) does not charge any separately 
                        stated fee for services for the purpose 
                        of improving any consumer's credit 
                        record, credit history, or credit 
                        rating.
                  (B) The organization does not refuse to 
                provide credit counseling services to a 
                consumer due to the inability of the consumer 
                to pay, the ineligibility of the consumer for 
                debt management plan enrollment, or the 
                unwillingness of the consumer to enroll in a 
                debt management plan.
                  (C) The organization establishes and 
                implements a fee policy which--
                          (i) requires that any fees charged to 
                        a consumer for services are reasonable,
                          (ii) allows for the waiver of fees if 
                        the consumer is unable to pay, and
                          (iii) except to the extent allowed by 
                        State law, prohibits charging any fee 
                        based in whole or in part on a 
                        percentage of the consumer's debt, the 
                        consumer's payments to be made pursuant 
                        to a debt management plan, or the 
                        projected or actual savings to the 
                        consumer resulting from enrolling in a 
                        debt management plan.
                  (D) At all times the organization has a board 
                of directors or other governing body--
                          (i) which is controlled by persons 
                        who represent the broad interests of 
                        the public, such as public officials 
                        acting in their capacities as such, 
                        persons having special knowledge or 
                        expertise in credit or financial 
                        education, and community leaders,
                          (ii) not more than 20 percent of the 
                        voting power of which is vested in 
                        persons who are employed by the 
                        organization or who will benefit 
                        financially, directly or indirectly, 
                        from the organization's activities 
                        (other than through the receipt of 
                        reasonable directors' fees or the 
                        repayment of consumer debt to creditors 
                        other than the credit counseling 
                        organization or its affiliates), and
                          (iii) not more than 49 percent of the 
                        voting power of which is vested in 
                        persons who are employed by the 
                        organization or who will benefit 
                        financially, directly or indirectly, 
                        from the organization's activities 
                        (other than through the receipt of 
                        reasonable directors' fees).
                  (E) The organization does not own more than 
                35 percent of--
                          (i) the total combined voting power 
                        of any corporation (other than a 
                        corporation which is an organization 
                        described in subsection (c)(3) and 
                        exempt from tax under subsection (a)) 
                        which is in the trade or business of 
                        lending money, repairing credit, or 
                        providing debt management plan 
                        services, payment processing, or 
                        similar services,
                          (ii) the profits interest of any 
                        partnership (other than a partnership 
                        which is an organization described in 
                        subsection (c)(3) and exempt from tax 
                        under subsection (a)) which is in the 
                        trade or business of lending money, 
                        repairing credit, or providing debt 
                        management plan services, payment 
                        processing, or similar services, and
                          (iii) the beneficial interest of any 
                        trust or estate (other than a trust 
                        which is an organization described in 
                        subsection (c)(3) and exempt from tax 
                        under subsection (a)) which is in the 
                        trade or business of lending money, 
                        repairing credit, or providing debt 
                        management plan services, payment 
                        processing, or similar services.
                  (F) The organization receives no amount for 
                providing referrals to others for debt 
                management plan services, and pays no amount to 
                others for obtaining referrals of consumers.
          (2) Additional requirements for organizations 
        described in subsection (c)(3).--
                  (A) In general.--In addition to the 
                requirements under paragraph (1), an 
                organization with respect to which the 
                provision of credit counseling services is a 
                substantial purpose and which is described in 
                paragraph (3) of subsection (c) shall not be 
                exempt from tax under subsection (a) unless 
                such organization is organized and operated in 
                accordance with the following requirements:
                          (i) The organization does not solicit 
                        contributions from consumers during the 
                        initial counseling process or while the 
                        consumer is receiving services from the 
                        organization.
                          (ii) The aggregate revenues of the 
                        organization which are from payments of 
                        creditors of consumers of the 
                        organization and which are attributable 
                        to debt management plan services do not 
                        exceed the applicable percentage of the 
                        total revenues of the organization.
                  (B) Applicable percentage.--
                          (i) In general.--For purposes of 
                        subparagraph (A)(ii), the applicable 
                        percentage is 50 percent.
                          (ii) Transition rule.--
                        Notwithstanding clause (i), in the case 
                        of an organization with respect to 
                        which the provision of credit 
                        counseling services is a substantial 
                        purpose and which is described in 
                        paragraph (3) of subsection (c) and 
                        exempt from tax under subsection (a) on 
                        the date of the enactment of this 
                        subsection, the applicable percentage 
                        is--
                                  (I) 80 percent for the first 
                                taxable year of such 
                                organization beginning after 
                                the date which is 1 year after 
                                the date of the enactment of 
                                this subsection, and
                                  (II) 70 percent for the 
                                second such taxable year 
                                beginning after such date, and
                                  (III) 60 percent for the 
                                third such taxable year 
                                beginning after such date.
          (3) Additional requirement for organizations 
        described in subsection (c)(4).--In addition to the 
        requirements under paragraph (1), an organization with 
        respect to which the provision of credit counseling 
        services is a substantial purpose and which is 
        described in paragraph (4) of subsection (c) shall not 
        be exempt from tax under subsection (a) unless such 
        organization notifies the Secretary, in such manner as 
        the Secretary may by regulations prescribe, that it is 
        applying for recognition as a credit counseling 
        organization.
          (4) Credit counseling services; debt management plan 
        services.--For purposes of this subsection--
                  (A) Credit counseling services.--The term 
                ``credit counseling services'' means--
                          (i) the providing of educational 
                        information to the general public on 
                        budgeting, personal finance, financial 
                        literacy, saving and spending 
                        practices, and the sound use of 
                        consumer credit,
                          (ii) the assisting of individuals and 
                        families with financial problems by 
                        providing them with counseling, or
                          (iii) a combination of the activities 
                        described in clauses (i) and (ii).
                  (B) Debt management plan services.--The term 
                ``debt management plan services'' means 
                services related to the repayment, 
                consolidation, or restructuring of a consumer's 
                debt, and includes the negotiation with 
                creditors of lower interest rates, the waiver 
                or reduction of fees, and the marketing and 
                processing of debt management plans.
  (r) Additional requirements for certain hospitals.--
          (1) In general.--A hospital organization to which 
        this subsection applies shall not be treated as 
        described in subsection (c)(3) unless the 
        organization--
                  (A) meets the community health needs 
                assessment requirements described in paragraph 
                (3),
                  (B) meets the financial assistance policy 
                requirements described in paragraph (4),
                  (C) meets the requirements on charges 
                described in paragraph (5), and
                  (D) meets the billing and collection 
                requirement described in paragraph (6).
          (2) Hospital organizations to which subsection 
        applies.--
                  (A) In general.--This subsection shall apply 
                to--
                          (i) an organization which operates a 
                        facility which is required by a State 
                        to be licensed, registered, or 
                        similarly recognized as a hospital, and
                          (ii) any other organization which the 
                        Secretary determines has the provision 
                        of hospital care as its principal 
                        function or purpose constituting the 
                        basis for its exemption under 
                        subsection (c)(3) (determined without 
                        regard to this subsection).
                  (B) Organizations with more than 1 hospital 
                facility.--If a hospital organization operates 
                more than 1 hospital facility--
                          (i) the organization shall meet the 
                        requirements of this subsection 
                        separately with respect to each such 
                        facility, and
                          (ii) the organization shall not be 
                        treated as described in subsection 
                        (c)(3) with respect to any such 
                        facility for which such requirements 
                        are not separately met.
          (3) Community health needs assessments.--
                  (A) In general.--An organization meets the 
                requirements of this paragraph with respect to 
                any taxable year only if the organization--
                          (i) has conducted a community health 
                        needs assessment which meets the 
                        requirements of subparagraph (B) in 
                        such taxable year or in either of the 2 
                        taxable years immediately preceding 
                        such taxable year, and
                          (ii) has adopted an implementation 
                        strategy to meet the community health 
                        needs identified through such 
                        assessment.
                  (B) Community health needs assessment.--A 
                community health needs assessment meets the 
                requirements of this paragraph if such 
                community health needs assessment--
                          (i) takes into account input from 
                        persons who represent the broad 
                        interests of the community served by 
                        the hospital facility, including those 
                        with special knowledge of or expertise 
                        in public health, and
                          (ii) is made widely available to the 
                        public.
          (4) Financial assistance policy.--An organization 
        meets the requirements of this paragraph if the 
        organization establishes the following policies:
                  (A) Financial assistance policy.--A written 
                financial assistance policy which includes--
                          (i) eligibility criteria for 
                        financial assistance, and whether such 
                        assistance includes free or discounted 
                        care,
                          (ii) the basis for calculating 
                        amounts charged to patients,
                          (iii) the method for applying for 
                        financial assistance,
                          (iv) in the case of an organization 
                        which does not have a separate billing 
                        and collections policy, the actions the 
                        organization may take in the event of 
                        non-payment, including collections 
                        action and reporting to credit 
                        agencies, and
                          (v) measures to widely publicize the 
                        policy within the community to be 
                        served by the organization.
                  (B) Policy relating to emergency medical 
                care.--A written policy requiring the 
                organization to provide, without 
                discrimination, care for emergency medical 
                conditions (within the meaning of section 1867 
                of the Social Security Act (42 U.S.C. 1395dd)) 
                to individuals regardless of their eligibility 
                under the financial assistance policy described 
                in subparagraph (A).
          (5) Limitation on charges.--An organization meets the 
        requirements of this paragraph if the organization--
                  (A) limits amounts charged for emergency or 
                other medically necessary care provided to 
                individuals eligible for assistance under the 
                financial assistance policy described in 
                paragraph (4)(A) to not more than the amounts 
                generally billed to individuals who have 
                insurance covering such care, and
                  (B) prohibits the use of gross charges.
          (6) Billing and collection requirements.--An 
        organization meets the requirement of this paragraph 
        only if the organization does not engage in 
        extraordinary collection actions before the 
        organization has made reasonable efforts to determine 
        whether the individual is eligible for assistance under 
        the financial assistance policy described in paragraph 
        (4)(A).
          (7) Regulatory authority.--The Secretary shall issue 
        such regulations and guidance as may be necessary to 
        carry out the provisions of this subsection, including 
        guidance relating to what constitutes reasonable 
        efforts to determine the eligibility of a patient under 
        a financial assistance policy for purposes of paragraph 
        (6).

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