Text: H.R.7 — 107th Congress (2001-2002)

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Reported to Senate (07/16/2002)


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[Congressional Bills 107th Congress]
[From the U.S. Government Printing Office]
[H.R. 7 Reported in Senate (RS)]






                                                       Calendar No. 496
107th CONGRESS
  2d Session
                                  H.R. 7

                          [Report No. 107-211]


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 19, 2001

     Received; read twice and referred to the Committee on Finance

                             July 16, 2002

               Reported by Mr. Baucus, with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 AN ACT


 
 To provide incentives for charitable contributions by individuals and 
 businesses, to improve the effectiveness and efficiency of government 
 program delivery to individuals and families in need, and to enhance 
   the ability of low-income Americans to gain financial security by 
                            building assets.

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

<DELETED>SECTION 1. SHORT TITLE; TABLE OF CONTENTS.</DELETED>

<DELETED>    (a) Short Title.--This Act may be cited as the ``Community 
Solutions Act of 2001''.</DELETED>
<DELETED>    (b) Table of Contents.--The table of contents is as 
follows:</DELETED>

<DELETED>Sec. 1. Short title; table of contents.
         <DELETED>TITLE I--CHARITABLE GIVING INCENTIVES PACKAGE

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

<DELETED>Sec. 201. Provision of assistance under government programs by 
                            religious and community organizations.
          <DELETED>TITLE III--INDIVIDUAL DEVELOPMENT ACCOUNTS

<DELETED>Sec. 301. Additional qualified entities eligible to conduct 
                            projects under the Assets for Independence 
                            Act.
<DELETED>Sec. 302. Increase in limitation on net worth.
<DELETED>Sec. 303. Change in limitation on deposits for an individual.
<DELETED>Sec. 304. Elimination of limitation on deposits for a 
                            household.
<DELETED>Sec. 305. Extension of program.
<DELETED>Sec. 306. Conforming amendments.
<DELETED>Sec. 307. Applicability.
 <DELETED>TITLE IV--CHARITABLE DONATIONS LIABILITY REFORM FOR IN-KIND 
                        CORPORATE CONTRIBUTIONS

<DELETED>Sec. 401. Charitable donations liability reform for in-kind 
                            corporate contributions.

    <DELETED>TITLE I--CHARITABLE GIVING INCENTIVES PACKAGE</DELETED>

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

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

                <DELETED>``For taxable years</DELETED>
                                                         The applicable
                <DELETED>  beginning in:</DELETED>
                                                           amount is:  
                <DELETED>    2002 and 2003.................        $25 
                <DELETED>    2004, 2005, 2006..............        $50 
                <DELETED>    2007, 2008, 2009..............        $75 
                <DELETED>    2010 and thereafter...........       $100.
        <DELETED>In the case of a joint return, the applicable amount 
        is twice the applicable amount determined under the preceding 
        table.''.</DELETED>
<DELETED>    (b) Direct Charitable Deduction.--</DELETED>
        <DELETED>    (1) In general.--Subsection (b) of section 63 of 
        such Code is amended by striking ``and'' at the end of 
        paragraph (1), by striking the period at the end of paragraph 
        (2) and inserting ``, and'', and by adding at the end thereof 
        the following new paragraph:</DELETED>
        <DELETED>    ``(3) the direct charitable 
        deduction.''.</DELETED>
        <DELETED>    (2) Definition.--Section 63 of such Code is 
        amended by redesignating subsection (g) as subsection (h) and 
        by inserting after subsection (f) the following new 
        subsection:</DELETED>
<DELETED>    ``(g) Direct Charitable Deduction.--For purposes of this 
section, the term `direct charitable deduction' means that portion of 
the amount allowable under section 170(a) which is taken as a direct 
charitable deduction for the taxable year under section 
170(m).''.</DELETED>
        <DELETED>    (3) Conforming amendment.--Subsection (d) of 
        section 63 of such Code is amended by striking ``and'' at the 
        end of paragraph (1), by striking the period at the end of 
        paragraph (2) and inserting ``, and'', and by adding at the end 
        thereof the following new paragraph:</DELETED>
        <DELETED>    ``(3) the direct charitable 
        deduction.''.</DELETED>
<DELETED>    (c) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 
2001.</DELETED>

<DELETED>SEC. 102. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT 
              ACCOUNTS FOR CHARITABLE PURPOSES.</DELETED>

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

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

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

<DELETED>SEC. 103. INCREASE IN CAP ON CORPORATE CHARITABLE 
              CONTRIBUTIONS.</DELETED>

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

                <DELETED>``For taxable years 
                    beginning</DELETED>
                                                         The applicable
                <DELETED>  in calendar year--</DELETED>
                                                        percentage is--
                <DELETED>    2002 through 2007.............         11 
                <DELETED>    2008..........................         12 
                <DELETED>    2009..........................         13 
                <DELETED>    2010 and thereafter...........      15.''.
<DELETED>    (c) Conforming Amendments.--</DELETED>
        <DELETED>    (1) Sections 512(b)(10) and 805(b)(2)(A) of such 
        Code are each amended by striking ``10 percent'' each place it 
        occurs and inserting ``the applicable percentage (determined 
        under section 170(b)(3))''.</DELETED>
        <DELETED>    (2) Sections 545(b)(2) and 556(b)(2) of such Code 
        are each amended by striking ``10-percent limitation'' and 
        inserting ``applicable percentage limitation''.</DELETED>
<DELETED>    (d) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 
2001.</DELETED>

<DELETED>SEC. 104. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD 
              INVENTORY.</DELETED>

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

<DELETED>SEC. 105. REFORM OF EXCISE TAX ON NET INVESTMENT INCOME OF 
              PRIVATE FOUNDATIONS.</DELETED>

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

<DELETED>SEC. 106. EXCISE TAX ON UNRELATED BUSINESS TAXABLE INCOME OF 
              CHARITABLE REMAINDER TRUSTS.</DELETED>

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

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

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

<DELETED>SEC. 108. ADJUSTMENT TO BASIS OF S CORPORATION STOCK FOR 
              CERTAIN CHARITABLE CONTRIBUTIONS.</DELETED>

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

      <DELETED>TITLE II--EXPANSION OF CHARITABLE CHOICE</DELETED>

<DELETED>SEC. 201. PROVISION OF ASSISTANCE UNDER GOVERNMENT PROGRAMS BY 
              RELIGIOUS AND COMMUNITY ORGANIZATIONS.</DELETED>

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

<DELETED>``SEC. 1991. CHARITABLE CHOICE.</DELETED>

<DELETED>    ``(a) Short Title.--This section may be cited as the 
`Charitable Choice Act of 2001'.</DELETED>
<DELETED>    ``(b) Purposes.--The purposes of this section are--
</DELETED>
        <DELETED>    ``(1) to enable assistance to be provided to 
        individuals and families in need in the most effective and 
        efficient manner;</DELETED>
        <DELETED>    ``(2) to supplement the Nation's social service 
        capacity by facilitating the entry of new, and the expansion of 
        existing, efforts by religious and other community 
        organizations in the administration and distribution of 
        government assistance under the government programs described 
        in subsection (c)(4);</DELETED>
        <DELETED>    ``(3) to prohibit discrimination against religious 
        organizations on the basis of religion in the administration 
        and distribution of government assistance under such 
        programs;</DELETED>
        <DELETED>    ``(4) to allow religious organizations to 
        participate in the administration and distribution of such 
        assistance without impairing the religious character and 
        autonomy of such organizations; and</DELETED>
        <DELETED>    ``(5) to protect the religious freedom of 
        individuals and families in need who are eligible for 
        government assistance, including expanding the possibility of 
        their being able to choose to receive services from a religious 
        organization providing such assistance.</DELETED>
<DELETED>    ``(c) Religious Organizations Included as Providers; 
Disclaimers.--</DELETED>
        <DELETED>    ``(1) In general.--</DELETED>
                <DELETED>    ``(A) Inclusion.--For any program 
                described in paragraph (4) that is carried out by the 
                Federal Government, or by a State or local government 
                with Federal funds, the government shall consider, on 
                the same basis as other nongovernmental organizations, 
                religious organizations to provide the assistance under 
                the program, and the program shall be implemented in a 
                manner that is consistent with the establishment clause 
                and the free exercise clause of the first amendment to 
                the Constitution.</DELETED>
                <DELETED>    ``(B) Discrimination prohibited.--Neither 
                the Federal Government, nor a State or local government 
                receiving funds under a program described in paragraph 
                (4), shall discriminate against an organization that 
                provides assistance under, or applies to provide 
                assistance under, such program on the basis that the 
                organization is religious or has a religious 
                character.</DELETED>
        <DELETED>    ``(2) Funds not aid to religion.--Federal, State, 
        or local government funds or other assistance that is received 
        by a religious organization for the provision of services under 
        this section constitutes aid to individuals and families in 
        need, the ultimate beneficiaries of such services, and not 
        support for religion or the organization's religious beliefs or 
        practices. Notwithstanding the provisions in this paragraph, 
        title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et 
        seq.) shall apply to organizations receiving assistance funded 
        under any program described in subsection (c)(4).</DELETED>
        <DELETED>    ``(3) Funds not endorsement of religion.--The 
        receipt by a religious organization of Federal, State, or local 
        government funds or other assistance under this section is not 
        an endorsement by the government of religion or of the 
        organization's religious beliefs or practices.</DELETED>
        <DELETED>    ``(4) Programs.--For purposes of this section, a 
        program is described in this paragraph--</DELETED>
                <DELETED>    ``(A) if it involves activities carried 
                out using Federal funds--</DELETED>
                        <DELETED>    ``(i) related to the prevention 
                        and treatment of juvenile delinquency and the 
                        improvement of the juvenile justice system, 
                        including programs funded under the Juvenile 
                        Justice and Delinquency Prevention Act of 1974 
                        (42 U.S.C. 5601 et seq.);</DELETED>
                        <DELETED>    ``(ii) related to the prevention 
                        of crime and assistance to crime victims and 
                        offenders' families, including programs funded 
                        under title I of the Omnibus Crime Control and 
                        Safe Streets Act of 1968 (42 U.S.C. 3701 et 
                        seq.);</DELETED>
                        <DELETED>    ``(iii) related to the provision 
                        of assistance under Federal housing statutes, 
                        including the Community Development Block Grant 
                        Program established under title I of the 
                        Housing and Community Development Act of 1974 
                        (42 U.S.C. 5301 et seq.);</DELETED>
                        <DELETED>    ``(iv) under subtitle B or D of 
                        title I of the Workforce Investment Act of 1998 
                        (29 U.S.C. 2801 et seq.);</DELETED>
                        <DELETED>    ``(v) under the Older Americans 
                        Act of 1965 (42 U.S.C. 3001 et seq.);</DELETED>
                        <DELETED>    ``(vi) related to the intervention 
                        in and prevention of domestic violence, 
                        including programs under the Child Abuse 
                        Prevention and Treatment Act (42 U.S.C. 5101 et 
                        seq.) or the Family Violence Prevention and 
                        Services Act (42 U.S.C. 10401 et 
                        seq.);</DELETED>
                        <DELETED>    ``(vii) related to hunger relief 
                        activities; or</DELETED>
                        <DELETED>    ``(viii) under the Job Access and 
                        Reverse Commute grant program established under 
                        section 3037 of the Federal Transit Act of 1998 
                        (49 U.S.C. 5309 note); or</DELETED>
                <DELETED>    ``(B)(i) if it involves activities to 
                assist students in obtaining the recognized equivalents 
                of secondary school diplomas and activities relating to 
                nonschool hours programs, including programs under--
                </DELETED>
                        <DELETED>    ``(I) chapter 3 of subtitle A of 
                        title II of the Workforce Investment Act of 
                        1998 (Public Law 105-220); or</DELETED>
                        <DELETED>    ``(II) part I of title X of the 
                        Elementary and Secondary Education Act (20 
                        U.S.C. 6301 et seq.); and</DELETED>
                <DELETED>    ``(ii) except as provided in subparagraph 
                (A) and clause (i), does not include activities carried 
                out under Federal programs providing education to 
                children eligible to attend elementary schools or 
                secondary schools, as defined in section 14101 of the 
                Elementary and Secondary Education Act of 1965 (20 
                U.S.C. 8801).</DELETED>
<DELETED>    ``(d) Organizational Character and Autonomy.--</DELETED>
        <DELETED>    ``(1) In general.--A religious organization that 
        provides assistance under a program described in subsection 
        (c)(4) shall have the right to retain its autonomy from 
        Federal, State, and local governments, including such 
        organization's control over the definition, development, 
        practice, and expression of its religious beliefs.</DELETED>
        <DELETED>    ``(2) Additional safeguards.--Neither the Federal 
        Government, nor a State or local government with Federal funds, 
        shall require a religious organization, in order to be eligible 
        to provide assistance under a program described in subsection 
        (c)(4), to--</DELETED>
                <DELETED>    ``(A) alter its form of internal 
                governance or provisions in its charter documents; 
                or</DELETED>
                <DELETED>    ``(B) remove religious art, icons, 
                scripture, or other symbols, or to change its name, 
                because such symbols or names are of a religious 
                character.</DELETED>
<DELETED>    ``(e) Employment Practices.--A religious organization's 
exemption provided under section 702 of the Civil Rights Act of 1964 
(42 U.S.C. 2000e-1) regarding employment practices shall not be 
affected by its participation in, or receipt of funds from, programs 
described in subsection (c)(4), and any provision in such programs that 
is inconsistent with or would diminish the exercise of an 
organization's autonomy recognized in section 702 or in this section 
shall have no effect. Nothing in this section alters the duty of a 
religious organization to comply with the nondiscrimination provisions 
of title VII of the Civil Rights Act of 1964 in the use of funds from 
programs described in subsection (c)(4).</DELETED>
<DELETED>    ``(f) Effect on Other Laws.--Nothing in this section shall 
alter the duty of a religious organization receiving assistance or 
providing services under any program described in subsection (c)(4) to 
comply with the nondiscrimination provisions in title VI of the Civil 
Rights Act of 1964 (42 U.S.C. 2000d et seq.) (prohibiting 
discrimination on the basis of race, color, and national origin), title 
IX of the Education Amendments of 1972 (20 U.S.C. 1681-1688) 
(prohibiting discrimination in education programs or activities on the 
basis of sex and visual impairment), section 504 of the Rehabilitation 
Act of 1973 (29 U.S.C. 794) (prohibiting discrimination against 
otherwise qualified disabled individuals), and the Age Discrimination 
Act of 1975 (42 U.S.C. 6101-6107) (prohibiting discrimination on the 
basis of age).</DELETED>
<DELETED>    ``(g) Rights of Beneficiaries of Assistance.--</DELETED>
        <DELETED>    ``(1) In general.--If an individual described in 
        paragraph (3) has an objection to the religious character of 
        the organization from which the individual receives, or would 
        receive, assistance funded under any program described in 
        subsection (c)(4), the appropriate Federal, State, or local 
        governmental entity shall provide to such individual (if 
        otherwise eligible for such assistance) within a reasonable 
        period of time after the date of such objection, assistance 
        that--</DELETED>
                <DELETED>    ``(A) is an alternative that is accessible 
                to the individual and unobjectionable to the individual 
                on religious grounds; and</DELETED>
                <DELETED>    ``(B) has a value that is not less than 
                the value of the assistance that the individual would 
                have received from such organization.</DELETED>
        <DELETED>    ``(2) Notice.--The appropriate Federal, State, or 
        local governmental entity shall guarantee that notice is 
        provided to the individuals described in paragraph (3) of the 
        rights of such individuals under this section.</DELETED>
        <DELETED>    ``(3) Individual described.--An individual 
        described in this paragraph is an individual who receives or 
        applies for assistance under a program described in subsection 
        (c)(4).</DELETED>
<DELETED>    ``(h) Nondiscrimination Against Beneficiaries.--</DELETED>
        <DELETED>    ``(1) Grants and cooperative agreements.--A 
        religious organization providing assistance through a grant or 
        cooperative agreement under a program described in subsection 
        (c)(4) shall not discriminate in carrying out the program 
        against an individual described in subsection (g)(3) on the 
        basis of religion, a religious belief, or a refusal to hold a 
        religious belief.</DELETED>
        <DELETED>    ``(2) Indirect forms of assistance.--A religious 
        organization providing assistance through a voucher, 
        certificate, or other form of indirect assistance under a 
        program described in subsection (c)(4) shall not deny an 
        individual described in subsection (g)(3) admission into such 
        program on the basis of religion, a religious belief, or a 
        refusal to hold a religious belief.</DELETED>
<DELETED>    ``(i) Accountability.--</DELETED>
        <DELETED>    ``(1) In general.--Except as provided in 
        paragraphs (2) and (3), a religious organization providing 
        assistance under any program described in subsection (c)(4) 
        shall be subject to the same regulations as other 
        nongovernmental organizations to account in accord with 
        generally accepted accounting principles for the use of such 
        funds and its performance of such programs.</DELETED>
        <DELETED>    ``(2) Limited audit.--</DELETED>
                <DELETED>    ``(A) Grants and cooperative agreements.--
                A religious organization providing assistance through a 
                grant or cooperative agreement under a program 
                described in subsection (c)(4) shall segregate 
                government funds provided under such program into a 
                separate account or accounts. Only the separate 
                accounts consisting of funds from the government shall 
                be subject to audit by the government.</DELETED>
                <DELETED>    ``(B) Indirect forms of assistance.--A 
                religious organization providing assistance through a 
                voucher, certificate, or other form of indirect 
                assistance under a program described in subsection 
                (c)(4) may segregate government funds provided under 
                such program into a separate account or accounts. If 
                such funds are so segregated, then only the separate 
                accounts consisting of funds from the government shall 
                be subject to audit by the government.</DELETED>
        <DELETED>    ``(3) Self audit.--A religious organization 
        providing services under any program described in subsection 
        (c)(4) shall conduct annually a self audit for compliance with 
        its duties under this section and submit a copy of the self 
        audit to the appropriate Federal, State, or local government 
        agency, along with a plan to timely correct variances, if any, 
        identified in the self audit.</DELETED>
<DELETED>    ``(j) Limitations on Use of Funds; Voluntariness.--No 
funds provided through a grant or cooperative agreement to a religious 
organization to provide assistance under any program described in 
subsection (c)(4) shall be expended for sectarian instruction, worship, 
or proselytization. If the religious organization offers such an 
activity, it shall be voluntary for the individuals receiving services 
and offered separate from the program funded under subsection (c)(4). A 
certificate shall be separately signed by religious organizations, and 
filed with the government agency that disburses the funds, certifying 
that the organization is aware of and will comply with this 
subsection.</DELETED>
<DELETED>    ``(k) Effect on State and Local Funds.--If a State or 
local government contributes State or local funds to carry out a 
program described in subsection (c)(4), the State or local government 
may segregate the State or local funds from the Federal funds provided 
to carry out the program or may commingle the State or local funds with 
the Federal funds. If the State or local government commingles the 
State or local funds, the provisions of this section shall apply to the 
commingled funds in the same manner, and to the same extent, as the 
provisions apply to the Federal funds.</DELETED>
<DELETED>    ``(l) Indirect Assistance.--When consistent with the 
purpose of a program described in subsection (c)(4), the Secretary of 
the department administering the program may direct the disbursement of 
some or all of the funds, if determined by the Secretary to be feasible 
and efficient, in the form of indirect assistance. For purposes of this 
section, `indirect assistance' constitutes assistance in which an 
organization receiving funds through a voucher, certificate, or other 
form of disbursement under this section receives such funding only as a 
result of the private choices of individual beneficiaries and no 
government endorsement of any particular religion, or of religion 
generally, occurs.</DELETED>
<DELETED>    ``(m) Treatment of Intermediate Grantors.--If a 
nongovernmental organization (referred to in this subsection as an 
`intermediate grantor'), acting under a grant or other agreement with 
the Federal Government, or a State or local government with Federal 
funds, is given the authority under the agreement to select 
nongovernmental organizations to provide assistance under the programs 
described in subsection (c)(4), the intermediate grantor shall have the 
same duties under this section as the government when selecting or 
otherwise dealing with subgrantors, but the intermediate grantor, if it 
is a religious organization, shall retain all other rights of a 
religious organization under this section.</DELETED>
<DELETED>    ``(n) Compliance.--A party alleging that the rights of the 
party under this section have been violated by a State or local 
government may bring a civil action for injunctive relief pursuant to 
section 1979 against the State official or local government agency that 
has allegedly committed such violation. A party alleging that the 
rights of the party under this section have been violated by the 
Federal Government may bring a civil action for injunctive relief in 
Federal district court against the official or government agency that 
has allegedly committed such violation.</DELETED>
<DELETED>    ``(o) Training and Technical Assistance for Small 
Nongovernmental Organizations.--</DELETED>
        <DELETED>    ``(1) In general.--From amounts made available to 
        carry out the purposes of the Office of Justice Programs 
        (including any component or unit thereof, including the Office 
        of Community Oriented Policing Services), funds are authorized 
        to provide training and technical assistance, directly or 
        through grants or other arrangements, in procedures relating to 
        potential application and participation in programs identified 
        in subsection (c)(4) to small nongovernmental organizations, as 
        determined by the Attorney General, including religious 
        organizations, in an amount not to exceed $50 million 
        annually.</DELETED>
        <DELETED>    ``(2) Types of assistance.--Such assistance may 
        include--</DELETED>
                <DELETED>    ``(A) assistance and information relative 
                to creating an organization described in section 
                501(c)(3) of the Internal Revenue Code of 1986 to 
                operate identified programs;</DELETED>
                <DELETED>    ``(B) granting writing assistance which 
                may include workshops and reasonable 
                guidance;</DELETED>
                <DELETED>    ``(C) information and referrals to other 
                nongovernmental organizations that provide expertise in 
                accounting, legal issues, tax issues, program 
                development, and a variety of other organizational 
                areas; and</DELETED>
                <DELETED>    ``(D) information and guidance on how to 
                comply with Federal nondiscrimination provisions 
                including, but not limited to, title VI of the Civil 
                Rights Act of 1964 (42 U.S.C. 2000d et seq.), title VII 
                of the Civil Rights Act of 1964 (42 U.S.C. 2000e et 
                seq.), the Fair Housing Act, as amended (42 U.S.C. 3601 
                et seq.), title IX of the Education Amendments of 1972 
                (20 U.S.C. 1681-1688), section 504 of the 
                Rehabilitation Act of 1973 (29 U.S.C. 694), and the Age 
                Discrimination Act of 1975 (42 U.S.C. 6101-
                6107).</DELETED>
        <DELETED>    ``(3) Reservation of funds.--An amount of no less 
        than $5,000,000 shall be reserved under this section. Small 
        nongovernmental organizations may apply for these funds to be 
        used for assistance in providing full and equal integrated 
        access to individuals with disabilities in programs under this 
        title.</DELETED>
        <DELETED>    ``(4) Priority.--In giving out the assistance 
        described in this subsection, priority shall be given to small 
        nongovernmental organizations serving urban and rural 
        communities.''.</DELETED>

     <DELETED>TITLE III--INDIVIDUAL DEVELOPMENT ACCOUNTS</DELETED>

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

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

<DELETED>SEC. 302. INCREASE IN LIMITATION ON NET WORTH.</DELETED>

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

<DELETED>SEC. 303. CHANGE IN LIMITATION ON DEPOSITS FOR AN 
              INDIVIDUAL.</DELETED>

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

<DELETED>SEC. 304. ELIMINATION OF LIMITATION ON DEPOSITS FOR A 
              HOUSEHOLD.</DELETED>

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

<DELETED>SEC. 305. EXTENSION OF PROGRAM.</DELETED>

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

<DELETED>SEC. 306. CONFORMING AMENDMENTS.</DELETED>

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

<DELETED>SEC. 307. APPLICABILITY.</DELETED>

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

 <DELETED>TITLE IV--CHARITABLE DONATIONS LIABILITY REFORM FOR IN-KIND 
                   CORPORATE CONTRIBUTIONS</DELETED>

<DELETED>SEC. 401. CHARITABLE DONATIONS LIABILITY REFORM FOR IN-KIND 
              CORPORATE CONTRIBUTIONS.</DELETED>

<DELETED>    (a) Definitions.--For purposes of this section:</DELETED>
        <DELETED>    (1) Aircraft.--The term ``aircraft'' has the 
        meaning provided that term in section 40102(6) of title 49, 
        United States Code.</DELETED>
        <DELETED>    (2) Business entity.--The term ``business entity'' 
        means a firm, corporation, association, partnership, 
        consortium, joint venture, or other form of 
        enterprise.</DELETED>
        <DELETED>    (3) Equipment.--The term ``equipment'' includes 
        mechanical equipment, electronic equipment, and office 
        equipment.</DELETED>
        <DELETED>    (4) Facility.--The term ``facility'' means any 
        real property, including any building, improvement, or 
        appurtenance.</DELETED>
        <DELETED>    (5) Gross negligence.--The term ``gross 
        negligence'' means voluntary and conscious conduct by a person 
        with knowledge (at the time of the conduct) that the conduct is 
        likely to be harmful to the health or well-being of another 
        person.</DELETED>
        <DELETED>    (6) Intentional misconduct.--The term 
        ``intentional misconduct'' means conduct by a person with 
        knowledge (at the time of the conduct) that the conduct is 
        harmful to the health or well-being of another 
        person.</DELETED>
        <DELETED>    (7) Motor vehicle.--The term ``motor vehicle'' has 
        the meaning provided that term in section 30102(6) of title 49, 
        United States Code.</DELETED>
        <DELETED>    (8) Nonprofit organization.--The term ``nonprofit 
        organization'' means--</DELETED>
                <DELETED>    (A) any organization described in section 
                501(c)(3) of the Internal Revenue Code of 1986 and 
                exempt from tax under section 501(a) of such Code; 
                or</DELETED>
                <DELETED>    (B) any not-for-profit organization 
                organized and conducted for public benefit and operated 
                primarily for charitable, civic, educational, 
                religious, welfare, or health purposes.</DELETED>
        <DELETED>    (9) State.--The term ``State'' means each of the 
        several States, the District of Columbia, the Commonwealth of 
        Puerto Rico, the Virgin Islands, Guam, American Samoa, the 
        Northern Mariana Islands, any other territory or possession of 
        the United States, or any political subdivision of any such 
        State, territory, or possession.</DELETED>
<DELETED>    (b) Liability.--</DELETED>
        <DELETED>    (1) Liability of business entities that donate 
        equipment to nonprofit organizations.--</DELETED>
                <DELETED>    (A) In general.--Subject to subsection 
                (c), a business entity shall not be subject to civil 
                liability relating to any injury or death that results 
                from the use of equipment donated by a business entity 
                to a nonprofit organization.</DELETED>
                <DELETED>    (B) Application.--This paragraph shall 
                apply with respect to civil liability under Federal and 
                State law.</DELETED>
        <DELETED>    (2) Liability of business entities providing use 
        of facilities to nonprofit organizations.--</DELETED>
                <DELETED>    (A) In general.--Subject to subsection 
                (c), a business entity shall not be subject to civil 
                liability relating to any injury or death occurring at 
                a facility of the business entity in connection with a 
                use of such facility by a nonprofit organization, if--
                </DELETED>
                        <DELETED>    (i) the use occurs outside of the 
                        scope of business of the business 
                        entity;</DELETED>
                        <DELETED>    (ii) such injury or death occurs 
                        during a period that such facility is used by 
                        the nonprofit organization; and</DELETED>
                        <DELETED>    (iii) the business entity 
                        authorized the use of such facility by the 
                        nonprofit organization.</DELETED>
                <DELETED>    (B) Application.--This paragraph shall 
                apply--</DELETED>
                        <DELETED>    (i) with respect to civil 
                        liability under Federal and State law; 
                        and</DELETED>
                        <DELETED>    (ii) regardless of whether a 
                        nonprofit organization pays for the use of a 
                        facility.</DELETED>
        <DELETED>    (3) Liability of business entities providing use 
        of a motor vehicle or aircraft.--</DELETED>
                <DELETED>    (A) In general.--Subject to subsection 
                (c), a business entity shall not be subject to civil 
                liability relating to any injury or death occurring as 
                a result of the operation of aircraft or a motor 
                vehicle of a business entity loaned to a nonprofit 
                organization for use outside of the scope of business 
                of the business entity, if--</DELETED>
                        <DELETED>    (i) such injury or death occurs 
                        during a period that such motor vehicle or 
                        aircraft is used by a nonprofit organization; 
                        and</DELETED>
                        <DELETED>    (ii) the business entity 
                        authorized the use by the nonprofit 
                        organization of motor vehicle or aircraft that 
                        resulted in the injury or death.</DELETED>
                <DELETED>    (B) Application.--This paragraph shall 
                apply--</DELETED>
                        <DELETED>    (i) with respect to civil 
                        liability under Federal and State law; 
                        and</DELETED>
                        <DELETED>    (ii) regardless of whether a 
                        nonprofit organization pays for the use of the 
                        aircraft or motor vehicle.</DELETED>
<DELETED>    (c) Exceptions.--Subsection (b) shall not apply to an 
injury or death that results from an act or omission of a business 
entity that constitutes gross negligence or intentional 
misconduct.</DELETED>
<DELETED>    (d) Superseding Provision.--</DELETED>
        <DELETED>    (1) In general.--Subject to paragraph (2) and 
        subsection (e), this title preempts the laws of any State to 
        the extent that such laws are inconsistent with this title, 
        except that this title shall not preempt any State law that 
        provides additional protection for a business entity for an 
        injury or death described in a paragraph of subsection (b) with 
        respect to which the conditions specified in such paragraph 
        apply.</DELETED>
        <DELETED>    (2) Limitation.--Nothing in this title shall be 
        construed to supersede any Federal or State health or safety 
        law.</DELETED>
<DELETED>    (e) Election of State Regarding Nonapplicability.--A 
provision of this title shall not apply to any civil action in a State 
court against a business entity in which all parties are citizens of 
the State if such State enacts a statute--</DELETED>
        <DELETED>    (1) citing the authority of this 
        section;</DELETED>
        <DELETED>    (2) declaring the election of such State that such 
        provision shall not apply to such civil action in the State; 
        and</DELETED>
        <DELETED>    (3) containing no other provisions.</DELETED>
<DELETED>    (f) Effective Date.--This section shall apply to injuries 
(and deaths resulting therefrom) occurring on or after the date of the 
enactment of this Act.</DELETED>

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``CARE Act of 
2002''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; etc.

                 TITLE I--CHARITABLE GIVING INCENTIVES

Sec. 101. Deduction for portion of charitable contributions to be 
                            allowed to individuals who do not itemize 
                            deductions.
Sec. 102. Tax-free distributions from individual retirement accounts 
                            for charitable purposes.
Sec. 103. Charitable deduction for contributions of food inventories.
Sec. 104. Charitable deduction for contributions of book inventories.
Sec. 105. Expansion of charitable contribution allowed for scientific 
                            property used for research and for computer 
                            technology and equipment used for 
                            educational purposes.
Sec. 106. Modifications to encourage contributions of capital gain real 
                            property made for conservation purposes.
Sec. 107. Exclusion of 25 percent of gain on sales or exchanges of land 
                            or water interests to eligible entities for 
                            conservation purposes.
Sec. 108. Tax exclusion for cost-sharing payments under Partners for 
                            Fish and Wildlife Program.
Sec. 109. Adjustment to basis of S corporation stock for certain 
                            charitable contributions.
Sec. 110. Enhanced deduction for charitable contribution of literary, 
                            musical, artistic, and scholarly 
                            compositions.

      TITLE II--DISCLOSURE OF INFORMATION RELATING TO TAX-EXEMPT 
                             ORGANIZATIONS

Sec. 201. Disclosure of written determinations.
Sec. 202. Disclosure of Internet web site and name under which 
                            organization does business.
Sec. 203. Modification to reporting capital transactions.
Sec. 204. Disclosure that Form 990 is publicly available.
Sec. 205. Disclosure to State officials of proposed actions related to 
                            section 501(c) organizations.

     TITLE III--OTHER CHARITABLE AND EXEMPT ORGANIZATION PROVISIONS

Sec. 301. Modification of excise tax on unrelated business taxable 
                            income of charitable remainder trusts.
Sec. 302. Modifications to section 512(b)(13).
Sec. 303. Simplification of lobbying expenditure limitation.
Sec. 304. Expedited review process for certain tax-exemption 
                            applications.
Sec. 305. Clarification of definition of church tax inquiry.
Sec. 306. Expansion of declaratory judgment remedy to tax-exempt 
                            organizations.
Sec. 307. Definition of convention or association of churches.
Sec. 308. Charitable contribution deduction for certain expenses 
                            incurred in support of Native Alaskan 
                            subsistence whaling.
Sec. 309. Payments by charitable organizations to victims of war on 
                            terrorism.
Sec. 310. Treatment of bonds issued to acquire standing timber on land 
                            subject to conservation easement.
Sec. 311. Exemption from income tax for State-created organizations 
                            providing property and casualty insurance 
                            for property for which such coverage is 
                            otherwise unavailable.
Sec. 312. Modification of special arbitrage rule for certain funds.
Sec. 313. Matching grants to low-income taxpayer clinics for return 
                            preparation.
Sec. 314. Modification of scholarship foundation rules.

                 TITLE IV--SOCIAL SERVICES BLOCK GRANT

Sec. 401. Restoration of funds for the Social Services Block Grant.
Sec. 402. Restoration of authority to transfer up to 10 percent of TANF 
                            funds to the Social Services Block Grant.
Sec. 403. Requirement to submit annual report on State activities.

                TITLE V--INDIVIDUAL DEVELOPMENT ACCOUNTS

Sec. 501. Short title.
Sec. 502. Purposes.
Sec. 503. Definitions.
Sec. 504. Structure and administration of qualified individual 
                            development account programs.
Sec. 505. Procedures for opening and maintaining an individual 
                            development account and qualifying for 
                            matching funds.
Sec. 506. Deposits by qualified individual development account 
                            programs.
Sec. 507. Withdrawal procedures.
Sec. 508. Certification and termination of qualified individual 
                            development account programs.
Sec. 509. Reporting, monitoring, and evaluation.
Sec. 510. Authorization of appropriations.
Sec. 511. Matching funds for individual development accounts provided 
                            through a tax credit for qualified 
                            financial institutions.

                      TITLE VI--REVENUE PROVISIONS

           Subtitle A--Tax Shelter Transparency Requirements

                  Part I--Taxpayer-Related Provisions

Sec. 601. Penalty for failing to disclose reportable transaction.
Sec. 602. Accuracy-related penalties for listed transactions and other 
                            reportable transactions having a 
                            significant tax avoidance purpose.
Sec. 603. Modifications of substantial understatement penalty for 
                            nonreportable transactions.
Sec. 604. Tax shelter exception to confidentiality privileges relating 
                            to taxpayer communications.

           Part II--Promoter and Preparer Related Provisions

       subpart a--provisions relating to reportable transactions
Sec. 611. Disclosure of reportable transactions.
Sec. 612. Modifications to penalty for failure to register tax 
                            shelters.
Sec. 613. Modification of penalty for failure to maintain lists of 
                            investors.
Sec. 614. Modification of actions to enjoin specified conduct related 
                            to tax shelters and reportable 
           subpart b--other promoter and preparer provisions
Sec. 621. Understatement of taxpayer's liability by income tax return 
                            preparer.
Sec. 622. Penalty on failure to report interests in foreign financial 
                            accounts.
Sec. 623. Frivolous tax submissions.
Sec. 624. Regulation of individuals practicing before the Department of 
                            Treasury.
Sec. 625. Penalty on promoters of tax shelters.

                       Part III--Other Provisions

Sec. 631. Affirmation of consolidated return regulation authority.

          Subtitle B--Tax Treatment of Inversion Transactions

Sec. 641. Tax treatment of inverted corporate entities.

                   Subtitle C--Reinsurance Agreements

Sec. 651. Reinsurance of United States risks in foreign jurisdictions.

      Subtitle D--Extension of Internal Revenue Service User Fees

Sec. 661. Extension of Internal Revenue Service user fees.

              Subtitle E--Imposition of Customs User Fees

Sec. 671. Customs user fees.

                 TITLE I--CHARITABLE GIVING INCENTIVES

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

    (a) In General.--Section 170 (relating to charitable, etc., 
contributions and gifts) is amended by redesignating subsection (m) as 
subsection (n) and by inserting after subsection (l) the following new 
subsection:
    ``(m) Deduction for Individuals Not Itemizing Deductions.--In the 
case of an individual who does not itemize deductions for any taxable 
year, there shall be taken into account as a direct charitable 
deduction under section 63 an amount equal to the amount allowable 
under subsection (a) for the taxable year for cash contributions, but 
only with respect to such contributions which exceed $250 ($500 in the 
case of a joint return), but do not exceed $500 ($1,000 in the case of 
a joint return).''.
    (b) Direct Charitable Deduction.--
            (1) In general.--Subsection (b) of section 63 (defining 
        taxable income) is amended by striking ``and'' at the end of 
        paragraph (1), by striking the period at the end of paragraph 
        (2) and inserting ``, and'', and by adding at the end the 
        following new paragraph:
            ``(3) the direct charitable deduction.''.
            (2) Definition.--Section 63 is amended by redesignating 
        subsection (g) as subsection (h) and by inserting after 
        subsection (f) the following new subsection:
    ``(g) Direct Charitable Deduction.--For purposes of this section, 
the term `direct charitable deduction' means that portion of the amount 
allowable under section 170(a) which is taken as a direct charitable 
deduction for the taxable year under section 170(m).''.
            (3) Conforming amendment.--Subsection (d) of section 63 is 
        amended by striking ``and'' at the end of paragraph (1), by 
        striking the period at the end of paragraph (2) and inserting 
        ``, and'', and by adding at the end the following new 
        paragraph:
            ``(3) the direct charitable deduction.''.
    (c) Study.--
            (1) In general.--The Secretary of the Treasury shall study 
        the effect of the amendments made by this section on increased 
        charitable giving and taxpayer compliance, including a 
        comparison of taxpayer compliance by those who itemize their 
        charitable contributions with those who claim a direct 
        charitable deduction.
            (2) Report.--By not later than December 31, 2003, the 
        Secretary of the Treasury shall report on the study required 
        under paragraph (1) to the Committee on Finance of the Senate 
        and the Committee on Ways and Means of the House of 
        Representatives.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001, and before 
January 1, 2004.

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

    (a) In General.--Subsection (d) of section 408 (relating to 
individual retirement accounts) is amended by adding at the end the 
following new paragraph:
            ``(8) Distributions for charitable purposes.--
                    ``(A) In general.--No amount shall be includible in 
                gross income by reason of a qualified charitable 
                distribution.
                    ``(B) Qualified charitable distribution.--For 
                purposes of this paragraph, the term `qualified 
                charitable distribution' means any distribution from an 
                individual retirement account--
                            ``(i) which is made directly by the 
                        trustee--
                                    ``(I) to an organization described 
                                in section 170(c), or
                                    ``(II) to a split-interest entity, 
                                and
                            ``(ii) which is made on or after the date 
                        that the individual for whose benefit the 
                        account is maintained has attained--
                                    ``(I) in the case of any 
                                distribution described in clause 
                                (i)(I), age 70\1/2\, and
                                    ``(II) in the case of any 
                                distribution described in clause 
                                (i)(II), age 59\1/2\.
                A distribution shall be treated as a qualified 
                charitable distribution only to the extent that the 
                distribution would be includible in gross income 
                without regard to subparagraph (A) and, in the case of 
                a distribution to a split-interest entity, only if no 
                person holds an income interest in the amounts in the 
                split-interest entity attributable to such distribution 
                other than one or more of the following: the individual 
                for whose benefit such account is maintained, the 
                spouse of such individual, or any organization 
                described in section 170(c).
                    ``(C) Contributions must be otherwise deductible.--
                For purposes of this paragraph--
                            ``(i) Direct contributions.--A distribution 
                        to an organization described in section 170(c) 
                        shall be treated as a qualified charitable 
                        distribution only if a deduction for the entire 
                        distribution would be allowable under section 
                        170 (determined without regard to subsection 
                        (b) thereof and this paragraph).
                            ``(ii) Split-interest gifts.--A 
                        distribution to a split-interest entity shall 
                        be treated as a qualified charitable 
                        distribution only if a deduction for the entire 
                        value of the interest in the distribution for 
                        the use of an organization described in section 
                        170(c) would be allowable under section 170 
                        (determined without regard to subsection (b) 
                        thereof and this paragraph).
                    ``(D) Application of section 72.--Notwithstanding 
                section 72, in determining the extent to which a 
                distribution is a qualified charitable distribution, 
                the entire amount of the distribution shall be treated 
                as includible in gross income without regard to 
                subparagraph (A) to the extent that such amount does 
                not exceed the aggregate amount which would be so 
                includible if all amounts were distributed from all 
                individual retirement accounts otherwise taken into 
                account in determining the inclusion on such 
                distribution under section 72. Proper adjustments shall 
                be made in applying section 72 to other distributions 
                in such taxable year and subsequent taxable years.
                    ``(E) Special rules for split-interest entities.--
                            ``(i) Charitable remainder trusts.--
                        Notwithstanding section 664(b), distributions 
                        made from a trust described in subparagraph 
                        (G)(i) shall be treated as ordinary income in 
                        the hands of the beneficiary to whom is paid 
                        the annuity described in section 664(d)(1)(A) 
                        or the payment described in section 
                        664(d)(2)(A).
                            ``(ii) Pooled income funds.--No amount 
                        shall be includible in the gross income of a 
                        pooled income fund (as defined in subparagraph 
                        (G)(ii)) by reason of a qualified charitable 
                        distribution to such fund, and all 
                        distributions from the fund which are 
                        attributable to qualified charitable 
                        distributions shall be treated as ordinary 
                        income to the beneficiary.
                            ``(iii) Charitable gift annuities.--
                        Qualified charitable distributions made for a 
                        charitable gift annuity shall not be treated as 
                        an investment in the contract.
                    ``(F) Denial of deduction.--Qualified charitable 
                distributions shall not be taken into account in 
                determining the deduction under section 170.
                    ``(G) Split-interest entity defined.--For purposes 
                of this paragraph, the term `split-interest entity' 
                means--
                            ``(i) a charitable remainder annuity trust 
                        or a charitable remainder unitrust (as such 
                        terms are defined in section 664(d)) which must 
                        be funded exclusively by qualified charitable 
                        distributions,
                            ``(ii) a pooled income fund (as defined in 
                        section 642(c)(5)), but only if the fund 
                        accounts separately for amounts attributable to 
                        qualified charitable distributions, and
                            ``(iii) a charitable gift annuity (as 
                        defined in section 501(m)(5)).''.
    (b) Modifications Relating to Information Returns by Certain 
Trusts.--
            (1) Returns.--Section 6034 (relating to returns by trusts 
        described in section 4947(a)(2) or claiming charitable 
        deductions under section 642(c)) is amended to read as follows:

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

    ``(a) Trusts Described in Section 4947(a)(2).--Every trust 
described in section 4947(a)(2) shall furnish such information with 
respect to the taxable year as the Secretary may by forms or 
regulations require.
    ``(b) Trusts Claiming a Charitable Deduction Under Section 
642(c).--
            ``(1) In general.--Every trust not required to file a 
        return under subsection (a) but claiming a charitable, etc., 
        deduction under section 642(c) for the taxable year shall 
        furnish such information with respect to such taxable year as 
        the Secretary may by forms or regulations prescribe, including:
                    ``(A) the amount of the charitable, etc., deduction 
                taken under section 642(c) within such year,
                    ``(B) the amount paid out within such year which 
                represents amounts for which charitable, etc., 
                deductions under section 642(c) have been taken in 
                prior years,
                    ``(C) the amount for which charitable, etc., 
                deductions have been taken in prior years but which has 
                not been paid out at the beginning of such year,
                    ``(D) the amount paid out of principal in the 
                current and prior years for charitable, etc., purposes,
                    ``(E) the total income of the trust within such 
                year and the expenses attributable thereto, and
                    ``(F) a balance sheet showing the assets, 
                liabilities, and net worth of the trust as of the 
                beginning of such year.
            ``(2) Exceptions.--Paragraph (1) shall not apply in the 
        case of a taxable year if all the net income for such year, 
        determined under the applicable principles of the law of 
        trusts, is required to be distributed currently to the 
        beneficiaries. Paragraph (1) shall not apply in the case of a 
        trust described in section 4947(a)(1).''.
            (2) Increase in penalty relating to filing of information 
        return by split-interest trusts.--Paragraph (2) of section 
        6652(c) (relating to returns by exempt organizations and by 
        certain trusts) is amended by adding at the end the following 
        new subparagraph:
                    ``(C) Split-interest trusts.--In the case of a 
                trust which is required to file a return under section 
                6034(a), subparagraphs (A) and (B) of this paragraph 
                shall not apply and paragraph (1) shall apply in the 
                same manner as if such return were required under 
                section 6033, except that--
                            ``(i) the 5 percent limitation in the 
                        second sentence of paragraph (1)(A) shall not 
                        apply,
                            ``(ii) in the case of any trust with gross 
                        income in excess of $250,000, the first 
                        sentence of paragraph (1)(A) shall be applied 
                        by substituting `$100' for `$20', and the 
                        second sentence thereof shall be applied by 
                        substituting `$50,000' for `$10,000', and
                            ``(iii) the third sentence of paragraph 
                        (1)(A) shall be disregarded.
                In addition to any penalty imposed on the trust 
                pursuant to this subparagraph, if the person required 
                to file such return knowingly fails to file the return, 
                such penalty shall also be imposed on such person who 
                shall be personally liable for such penalty.''.
            (3) Confidentiality of noncharitable beneficiaries.--
        Subsection (b) of section 6104 (relating to inspection of 
        annual information returns) is amended by adding at the end the 
        following new sentence: ``In the case of a trust which is 
        required to file a return under section 6034(a), this 
        subsection shall not apply to information regarding 
        beneficiaries which are not organizations described in section 
        170(c).''.
    (c) Effective Dates.--
            (1) Subsection (a).--The amendment made by subsection (a) 
        shall apply to taxable years beginning after December 31, 2002.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to returns for taxable years beginning after 
        December 31, 2002.

SEC. 103. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD INVENTORIES.

    (a) In General.--Subsection (e) of section 170 (relating to certain 
contributions of ordinary income and capital gain property) is amended 
by adding at the end the following new paragraph:
            ``(7) Application of paragraph (3) to certain contributions 
        of food inventory.--For purposes of this section--
                    ``(A) Extension to individuals.--In the case of a 
                charitable contribution of apparently wholesome food--
                            ``(i) paragraph (3)(A) shall be applied 
                        without regard to whether the contribution is 
                        made by a C corporation, and
                            ``(ii) in the case of a taxpayer other than 
                        a C corporation, the aggregate amount of such 
                        contributions from any trade or business (or 
                        interest therein) of the taxpayer for any 
                        taxable year which may be taken into account 
                        under this section shall not exceed 10 percent 
                        of the taxpayer's net income from any such 
                        trade or business, computed without regard to 
                        this section, for such taxable year.
                    ``(B) Determination of basis.--If a taxpayer--
                            ``(i) does not account for inventories 
                        under section 471, and
                            ``(ii) is not required to capitalize 
                        indirect costs under section 263A,
                the taxpayer may elect, solely for purposes of 
                paragraph (3)(B), to treat the basis of any apparently 
                wholesome food as being equal to 25 percent of the fair 
                market value of such food.
                    ``(C) Determination of fair market value.--In the 
                case of a charitable contribution of apparently 
                wholesome food which is a qualified contribution 
                (within the meaning of paragraph (3), as modified by 
                subparagraph (A) of this paragraph) and which, solely 
                by reason of internal standards of the taxpayer or lack 
                of market, cannot or will not be sold, the fair market 
                value of such contribution shall be determined--
                            ``(i) without regard to such internal 
                        standards or such lack of market and
                            ``(ii) by taking into account the price at 
                        which the same or substantially the same food 
                        items are sold by the taxpayer at the time of 
                        the contribution (or, if not so sold at such 
                        time, in the recent past).
                    ``(D) Apparently wholesome food.--For purposes of 
                this paragraph, the term `apparently wholesome food' 
                has the meaning given such term by section 22(b)(2) of 
                the Bill Emerson Good Samaritan Food Donation Act (42 
                U.S.C. 1791(b)(2)), as in effect on the date of the 
                enactment of this paragraph.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2002.

SEC. 104. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF BOOK INVENTORIES.

    (a) In General.--Section 170(e)(3) (relating to certain 
contributions of ordinary income and capital gain property) is amended 
by redesignating subparagraph (C) as subparagraph (D) and by inserting 
after subparagraph (B) the following new subparagraph:
                    ``(C) Special rule for contributions of book 
                inventory for educational purposes.--
                            ``(i) Contributions of book inventory.--In 
                        determining whether a qualified book 
                        contribution is a qualified contribution, 
                        subparagraph (A) shall be applied without 
                        regard to whether--
                                    ``(I) the donee is an organization 
                                described in the matter preceding 
                                clause (i) of subparagraph (A), and
                                    ``(II) the property is to be used 
                                by the donee solely for the care of the 
                                ill, the needy, or infants.
                            ``(ii) Amount of reduction.--
                        Notwithstanding subparagraph (B), the amount of 
                        the reduction determined under paragraph (1)(A) 
                        shall not exceed the amount by which the fair 
                        market value of the contributed property (as 
                        determined by the taxpayer using a bona fide 
                        published market price for such book (using the 
                        same printing and edition) published within 7 
                        years preceding the contribution) exceeds twice 
                        the basis of such property.
                            ``(iii) Qualified book contribution.--For 
                        purposes of this paragraph, the term `qualified 
                        book contribution' means a charitable 
                        contribution of books, but only if the 
                        requirements of clauses (iv) and (v) are met.
                            ``(iv) Identity of donee.--The requirement 
                        of this clause is met if the contribution is to 
                        an organization--
                                    ``(I) described in subclause (I) or 
                                (III) of paragraph (6)(B)(i), or
                                    ``(II) described in section 
                                501(c)(3) and exempt from tax under 
                                section 501(a) (other than a private 
                                foundation, as defined in section 
                                509(a), which is not an operating 
                                foundation, as defined in section 
                                4942(j)(3)), which is organized 
                                primarily to make books available to 
                                the general public at no cost or to 
                                operate a literacy program.
                            ``(v) Certification by donee.--The 
                        requirement of this clause is met if, in 
                        addition to the certifications required by 
                        subparagraph (A) (as modified by this 
                        subparagraph), the donee certifies in writing 
                        that--
                                    ``(I) the books are suitable, in 
                                terms of currency, content, and 
                                quantity, for use in the donee's 
                                educational programs, and
                                    ``(II) the donee will use the books 
                                in its educational programs.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.

SEC. 105. EXPANSION OF CHARITABLE CONTRIBUTION ALLOWED FOR SCIENTIFIC 
              PROPERTY USED FOR RESEARCH AND FOR COMPUTER TECHNOLOGY 
              AND EQUIPMENT USED FOR EDUCATIONAL PURPOSES.

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

SEC. 106. MODIFICATIONS TO ENCOURAGE CONTRIBUTIONS OF CAPITAL GAIN REAL 
              PROPERTY MADE FOR CONSERVATION PURPOSES.

    (a) In General.--Section 170(h) (relating to qualified conservation 
contribution) is amended by adding at the end the following new 
paragraph:
            ``(7) Additional incentives for qualified conservation 
        contributions.--
                    ``(A) In general.--In the case of any qualified 
                conservation contribution (as defined in paragraph (1)) 
                made by an individual--
                            ``(i) subparagraph (C) of subsection (b)(1) 
                        shall not apply,
                            ``(ii) except as provided in subparagraph 
                        (B)(i), subsections (b)(1)(A) and (d)(1) shall 
                        be applied separately with respect to such 
                        contributions by treating references to 50 
                        percent of the taxpayer's contribution base as 
                        references to the amount of such contributions 
                        reduced by the amount of other contributions 
                        allowable under subsection (b)(1)(A), and
                            ``(iii) subparagraph (A) of subsection 
                        (d)(1) shall be applied--
                                    ``(I) by substituting `15 
                                succeeding taxable years' for `5 
                                succeeding taxable years', and
                                    ``(II) by applying clause (ii) to 
                                each of the 15 succeeding taxable 
                                years.
                    ``(B) Special rules for eligible farmers and 
                ranchers.--
                            ``(i) In general.--In the case of any such 
                        contributions made by an eligible farmer or 
                        rancher--
                                    ``(I) if the taxpayer is an 
                                individual, subsections (b)(1)(A) and 
                                (d)(1) shall be applied separately with 
                                respect to such contributions by 
                                substituting `the taxpayer's 
                                contribution base reduced by the amount 
                                of the deduction under subsection (a) 
                                for contributions described in 
                                subsection (b)(1)(A) (other than 
                                qualified conservation contributions)' 
                                for `50 percent of the taxpayer's 
                                contribution base' each place it 
                                appears, and
                                    ``(II) if the taxpayer is a 
                                corporation, subsections (b)(2) and 
                                (d)(2) shall be applied separately with 
                                respect to such contributions, 
                                subsection (b)(2) shall be applied with 
                                respect to such contributions as if 
                                such subsection did not contain the 
                                words `10 percent of' and as if 
                                subparagraph (A) thereof read `the 
                                deduction under this section for 
                                qualified conservation contributions', 
                                and rules similar to the rules of 
                                subparagraph (A)(iii) shall apply for 
                                purposes of subsection (d)(2).
                            ``(ii) Definition.--For purposes of clause 
                        (i), the term `eligible farmer or rancher' 
                        means a taxpayer whose gross income from the 
                        trade or business of farming (within the 
                        meaning of section 2032A(e)(5)) is at least 51 
                        percent of the taxpayer's gross income for the 
                        taxable year, and, in the case of a C 
                        corporation, the stock of which is not publicly 
                        traded on a recognized exchange.''.
    (c) Effective Date.--The amendment made by this section shall apply 
to contributions made in taxable years beginning after December 31, 
2002.

SEC. 107. EXCLUSION OF 25 PERCENT OF GAIN ON SALES OR EXCHANGES OF LAND 
              OR WATER INTERESTS TO ELIGIBLE ENTITIES FOR CONSERVATION 
              PURPOSES.

    (a) In General.--Part III of subchapter B of chapter 1 (relating to 
items specifically excluded from gross income) is amended by inserting 
after section 121 the following new section:

``SEC. 121A. 25-PERCENT EXCLUSION OF GAIN ON SALES OR EXCHANGES OF LAND 
              OR WATER INTERESTS TO ELIGIBLE ENTITIES FOR CONSERVATION 
              PURPOSES.

    ``(a) Exclusion.--Gross income shall not include 25 percent of the 
qualifying gain from a conservation sale of a long-held qualifying land 
or water interest.
    ``(b) Qualifying Gain.--For purposes of this section--
            ``(1) In general.--The term `qualifying gain' means any 
        gain which would be recognized as long-term capital gain, 
        reduced by the amount of any long-term capital gain 
        attributable to disqualified improvements.
            ``(2) Disqualified improvement.--For purposes of paragraph 
        (1), the term `disqualified improvement' means any building, 
        structure, or other improvement, other than--
                    ``(A) any improvement which is described in section 
                175(c)(1), determined--
                            ``(i) without regard to the requirements 
                        that the taxpayer be engaged in farming, and
                            ``(ii) without taking into account 
                        subparagraphs (A) and (B) thereof, or
                    ``(B) any improvement which the Secretary 
                determines directly furthers conservation purposes.
            ``(3) Special rule for sales of stock.--If the long-held 
        qualifying land or water interest is 1 or more shares of stock 
        in a qualifying land or water corporation, the qualifying gain 
        is equal to the lesser of--
                    ``(A) the qualifying gain determined under 
                paragraph (1), or
                    ``(B) the product of--
                            ``(i) the percentage of such corporation's 
                        stock which is transferred by the taxpayer, 
                        times
                            ``(ii) the amount which would have been the 
                        qualifying gain (determined under paragraph 
                        (1)) if there had been a conservation sale by 
                        such corporation of all of its interests in the 
                        land and water for a price equal to the product 
                        of the fair market value of such interests 
                        times the ratio of--
                                    ``(I) the proceeds of the 
                                conservation sale of the stock, to
                                    ``(II) the fair market value of the 
                                stock which was the subject of the 
                                conservation sale.
    ``(c) Conservation Sale.--For purposes of this section, the term 
`conservation sale' means a sale or exchange which meets the following 
requirements:
            ``(1) Transferee is an eligible entity.--The transferee of 
        the long-held qualifying land or water interest is an eligible 
        entity.
            ``(2) Qualifying letter of intent required.--At the time of 
        the sale or exchange, such transferee provides the taxpayer 
        with a qualifying letter of intent.
            ``(3) Nonapplication to certain sales.--The sale or 
        exchange is not made pursuant to an order of condemnation or 
        eminent domain.
            ``(4) Controlling interest in stock sale required.--In the 
        case of the sale or exchange of stock in a qualifying land or 
        water corporation, at the end of the taxpayer's taxable year in 
        which such sale or exchange occurs, the transferee's ownership 
        of stock in such corporation meets the requirements of section 
        1504(a)(2) (determined by substituting `90 percent' for `80 
        percent' each place it appears).
    ``(d) Long-Held Qualifying Land or Water Interest.--For purposes of 
this section--
            ``(1) In general.--The term `long-held qualifying land or 
        water interest' means any qualifying land or water interest 
        owned by the taxpayer or a member of the taxpayer's family (as 
        defined in section 2032A(e)(2)) at all times during the 5-year 
        period ending on the date of the sale.
            ``(2) Qualifying land or water interest.--
                    ``(A) In general.--The term `qualifying land or 
                water interest' means a real property interest which 
                constitutes--
                            ``(i) a taxpayer's entire interest in land,
                            ``(ii) a taxpayer's entire interest in 
                        water rights,
                            ``(iii) a qualified real property interest 
                        (as defined in section 170(h)(2)), or
                            ``(iv) stock in a qualifying land or water 
                        corporation.
                    ``(B) Entire interest.--For purposes of clause (i) 
                or (ii) of subparagraph (A)--
                            ``(i) a partial interest in land or water 
                        is not a taxpayer's entire interest if an 
                        interest in land or water was divided in order 
                        to create such partial interest in order to 
                        avoid the requirements of such clause or 
                        section 170(f)(3)(A), and
                            ``(ii) a taxpayer's entire interest in 
                        certain land does not fail to satisfy 
                        subparagraph (A)(i) solely because the taxpayer 
                        has retained an interest in other land, even if 
                        the other land is contiguous with such certain 
                        land and was acquired by the taxpayer along 
                        with such certain land in a single conveyance.
    ``(e) Other Definitions.--For purposes of this section--
            ``(1) Eligible entity.--The term `eligible entity' means--
                    ``(A) a governmental unit referred to in section 
                170(c)(1), or an agency or department thereof operated 
                primarily for 1 or more of the conservation purposes 
                specified in clause (i), (ii), or (iii) of section 
                170(h)(4)(A), or
                    ``(B) an entity which is--
                            ``(i) described in section 170(b)(1)(A)(vi) 
                        or section 170(h)(3)(B), and
                            ``(ii) organized and at all times operated 
                        primarily for 1 or more of the conservation 
                        purposes specified in clause (i), (ii), or 
                        (iii) of section 170(h)(4)(A).
            ``(2) Qualifying letter of intent.--The term `qualifying 
        letter of intent' means a written letter of intent which 
        includes the following statement: `The transferee's intent is 
        that this acquisition will serve 1 or more of the conservation 
        purposes specified in clause (i), (ii), or (iii) of section 
        170(h)(4)(A) of the Internal Revenue Code of 1986, that the 
        transferee's use of the property so acquired will be consistent 
        with section 170(h)(5) of such Code, and that the use of the 
        property will continue to be consistent with such section, even 
        if ownership or possession of such property is subsequently 
        transferred to another person.'
            ``(3) Qualifying land or water corporation.--The term 
        `qualifying land or water corporation' means a C corporation 
        (as defined in section 1361(a)(2)) if, as of the date of the 
        conservation sale--
                    ``(A) the fair market value of the corporation's 
                interests in land or water held by the corporation at 
                all times during the preceding 5 years equals or 
                exceeds 90 percent of the fair market value of all of 
                such corporation's assets, and
                    ``(B) not more than 50 percent of the total fair 
                market value of such corporation's assets consists of 
                water rights or infrastructure related to the delivery 
                of water, or both.
    ``(f) Tax on Subsequent Transfers or Removals of Conservation 
Restrictions.--
            ``(1) In general.--A tax is hereby imposed on any 
        subsequent--
                    ``(A) transfer by an eligible entity of ownership 
                or possession, whether by sale, exchange, or lease, of 
                property acquired directly or indirectly in--
                            ``(i) a conservation sale described in 
                        subsection (a), or
                            ``(ii) a transfer described in clause (i), 
                        (ii), or (iii) of paragraph (4)(A), or
                    ``(B) removal of a conservation restriction 
                contained in an instrument of conveyance of such 
                property.
            ``(2) Amount of tax.--The amount of tax imposed by 
        paragraph (1) on any transfer or removal shall be equal to the 
        sum of--
                    ``(A) either--
                            ``(i) 20 percent of the fair market value 
                        (determined at the time of the transfer) of the 
                        property the ownership or possession of which 
                        is transferred, or
                            ``(ii) 20 percent of the fair market value 
                        (determined at the time immediately after the 
                        removal) of the property upon which the 
                        conservation restriction was removed, plus
                    ``(B) the product of--
                            ``(i) the highest rate of tax specified in 
                        section 11, times
                            ``(ii) any gain or income realized by the 
                        transferor or person removing such restriction 
                        as a result of the transfer or removal.
            ``(3) Liability.--The tax imposed by paragraph (1) shall be 
        paid--
                    ``(A) on any transfer, by the transferor, and
                    ``(B) on any removal of a conservation restriction 
                contained in an instrument of conveyance, by the person 
                removing such restriction.
            ``(4) Relief from liability.--The person (otherwise liable 
        for any tax imposed by paragraph (1)) shall be relieved of 
        liability for the tax imposed by paragraph (1)--
                    ``(A) with respect to any transfer if--
                            ``(i) the transferee is an eligible entity 
                        which provides such person, at the time of 
                        transfer, a qualifying letter of intent,
                            ``(ii) the transferee is not an eligible 
                        entity, it is established to the satisfaction 
                        of the Secretary, that the transfer of 
                        ownership or possession, as the case may be, 
                        will be consistent with section 170(h)(5), and 
                        the transferee provides such person, at the 
                        time of transfer, a qualifying letter of 
                        intent, or
                            ``(iii) tax has previously been paid under 
                        this subsection as a result of a prior transfer 
                        of ownership or possession of the same 
                        property, or
                    ``(B) with respect to any removal of a conservation 
                restriction contained in an instrument of conveyance, 
                if it is established to the satisfaction of the 
                Secretary that the retention of the restriction was 
                impracticable or impossible and the proceeds continue 
                to be used in a manner consistent with 1 or more of the 
                conservation purposes specified in clause (i), (ii), or 
                (iii) of section 170(h)(4)(A).
            ``(5) Administrative provisions.--For purposes of subtitle 
        F, the taxes imposed by this subsection shall be treated as 
        excise taxes with respect to which the deficiency procedures of 
        such subtitle apply.
            ``(6) Reporting.--The Secretary may require such reporting 
        as may be necessary or appropriate to further the purpose under 
        this section that any conservation use be in perpetuity.''.
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 is amended by inserting after the item 
relating to section 121 the following new item:

                              ``Sec. 121A. 25-percent exclusion of gain 
                                        on sales or exchanges of land 
                                        or water interests to eligible 
                                        entities for conservation 
                                        purposes.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to sales or exchanges occurring after December 31, 2003, in 
taxable years ending after such date.

SEC. 108. TAX EXCLUSION FOR COST-SHARING PAYMENTS UNDER PARTNERS FOR 
              FISH AND WILDLIFE PROGRAM.

    (a) In General.--Section 126(a) (relating to certain cost-sharing 
payments) is amended by redesignating paragraph (10) as paragraph (11) 
and by inserting after paragraph (9) the following:
            ``(10) The Partners for Fish and Wildlife Program 
        authorized by the Fish and Wildlife Act of 1956 (16 U.S.C. 742a 
        et seq.).''
    (b) Effective Date.--The amendments made by this section shall 
apply to payments received in taxable years beginning after December 
31, 2002.

SEC. 109. ADJUSTMENT TO BASIS OF S CORPORATION STOCK FOR CERTAIN 
              CHARITABLE CONTRIBUTIONS.

    (a) In General.--Paragraph (2) of section 1367(a) (relating to 
adjustments to basis of stock of shareholders, etc.) is amended by 
adding at the end the following new flush sentence:
        ``The decrease under subparagraph (B) by reason of a charitable 
        contribution (as defined in section 170(c)) of property shall 
        be the amount equal to the shareholder's pro rata share of the 
        adjusted basis of such property.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made in taxable years beginning after December 31, 
2002.

SEC. 110. ENHANCED DEDUCTION FOR CHARITABLE CONTRIBUTION OF LITERARY, 
              MUSICAL, ARTISTIC, AND SCHOLARLY COMPOSITIONS.

    (a) In General.--Subsection (e) of section 170 (relating to certain 
contributions of ordinary income and capital gain property), as amended 
by this Act, is amended by adding at the end the following new 
paragraph:
            ``(8) Special rule for certain contributions of literary, 
        musical, artistic, or scholarly compositions.--
                    ``(A) In general.--In the case of a qualified 
                artistic charitable contribution--
                            ``(i) the amount of such contribution taken 
                        into account under this section shall be the 
                        fair market value of the property contributed 
                        (determined at the time of such contribution), 
                        and
                            ``(ii) no reduction in the amount of such 
                        contribution shall be made under paragraph (1).
                    ``(B) Qualified artistic charitable contribution.--
                For purposes of this paragraph, the term `qualified 
                artistic charitable contribution' means a charitable 
                contribution of any literary, musical, artistic, or 
                scholarly composition, or similar property, or the 
                copyright thereon (or both), but only if--
                            ``(i) such property was created by the 
                        personal efforts of the taxpayer making such 
                        contribution no less than 18 months prior to 
                        such contribution,
                            ``(ii) the taxpayer--
                                    ``(I) has received a qualified 
                                appraisal of the fair market value of 
                                such property in accordance with the 
                                regulations under this section, and
                                    ``(II) attaches to the taxpayer's 
                                income tax return for the taxable year 
                                in which such contribution was made a 
                                copy of such appraisal,
                            ``(iii) the donee is an organization 
                        described in subsection (b)(1)(A),
                            ``(iv) the use of such property by the 
                        donee is related to the purpose or function 
                        constituting the basis for the donee's 
                        exemption under section 501 (or, in the case of 
                        a governmental unit, to any purpose or function 
                        described under section 501(c)),
                            ``(v) the taxpayer receives from the donee 
                        a written statement representing that the 
                        donee's use of the property will be in 
                        accordance with the provisions of clause (iv), 
                        and
                            ``(vi) the written appraisal referred to in 
                        clause (ii) includes evidence of the extent (if 
                        any) to which property created by the personal 
                        efforts of the taxpayer and of the same type as 
                        the donated property is or has been--
                                    ``(I) owned, maintained, and 
                                displayed by organizations described in 
                                subsection (b)(1)(A), and
                                    ``(II) sold to or exchanged by 
                                persons other than the taxpayer, donee, 
                                or any related person (as defined in 
                                section 465(b)(3)(C)).
                    ``(C) Maximum dollar limitation; no carryover of 
                increased deduction.--The increase in the deduction 
                under this section by reason of this paragraph for any 
                taxable year--
                            ``(i) shall not exceed the artistic 
                        adjusted gross income of the taxpayer for such 
                        taxable year, and
                            ``(ii) shall not be taken into account in 
                        determining the amount which may be carried 
                        from such taxable year under subsection (d).
                    ``(D) Artistic adjusted gross income.--For purposes 
                of this paragraph, the term `artistic adjusted gross 
                income' means that portion of the adjusted gross income 
                of the taxpayer for the taxable year attributable to--
                            ``(i) income from the sale or use of 
                        property created by the personal efforts of the 
                        taxpayer which is of the same type as the 
                        donated property, and
                            ``(ii) income from teaching, lecturing, 
                        performing, or similar activity with respect to 
                        property described in clause (i).
                    ``(E) Paragraph not to apply to certain 
                contributions.--Subparagraph (A) shall not apply to any 
                charitable contribution of any letter, memorandum, or 
                similar property which was written, prepared, or 
                produced by or for an individual while the individual 
                is an officer or employee of any person (including any 
                government agency or instrumentality) unless such 
                letter, memorandum, or similar property is entirely 
                personal.
                    ``(F) Copyright treated as separate property for 
                partial interest rule.--In the case of a qualified 
                artistic charitable contribution, the tangible 
                literary, musical, artistic, or scholarly composition, 
                or similar property and the copyright on such work 
                shall be treated as separate properties for purposes of 
                this paragraph and subsection (f)(3).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made after December 31, 2002, in taxable years ending 
after such date.

      TITLE II--DISCLOSURE OF INFORMATION RELATING TO TAX-EXEMPT 
                             ORGANIZATIONS

SEC. 201. DISCLOSURE OF WRITTEN DETERMINATIONS.

    (a) In General.--Section 6110(l) (relating to section not to apply) 
is amended by striking all matter before subparagraph (A) of paragraph 
(2) and inserting the following:
    ``(l) Section Not To Apply.--
            ``(1) In general.--This section shall not apply to any 
        matter to which section 6104 or 6105 applies, except that this 
        section shall apply to any written determination and related 
        background file document relating to the tax-exempt status of 
        an organization described under subsection (c) or (d) of 
        section 501 (including any organization that has applied for 
        tax-exempt status under such subsection) which is not required 
        to be disclosed by section 6104(a)(1)(A) but which is within 
        the scope of section 6104.
            ``(2) Additional matters.--This section shall not apply to 
        any--''.
    (b) Effective Date.--The amendment made by this section shall apply 
to written determinations issued after December 31, 2002.

SEC. 202. DISCLOSURE OF INTERNET WEB SITE AND NAME UNDER WHICH 
              ORGANIZATION DOES BUSINESS.

    (a) In General.--Section 6033 (relating to returns by exempt 
organizations) is amended by redesignating subsection (h) as subsection 
(i) and by inserting after subsection (g) the following new subsection:
    ``(h) Disclosure of Name Under Which Organization Does Business and 
Its Internet Web Site.--Any organization which is subject to the 
requirements of subsection (a) shall include on the return required 
under subsection (a)--
            ``(1) any name under which such organization operates or 
        does business, and
            ``(2) the Internet web site address (if any) of such 
        organization.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to returns filed after December 31, 2002.

SEC. 203. MODIFICATION TO REPORTING CAPITAL TRANSACTIONS.

    (a) Requirement of Summary Report.--Section 6033(c) (relating to 
additional provisions relating to private foundations) is amended by 
adding at the end the following new sentence: ``Any information 
included in an annual return regarding the gain or loss from the sale 
or other disposition of property which is required to be furnished in 
order to calculate the tax on net investment income shall also be 
reported in summary form with a notice that detailed information is 
available upon request by the public.''.
    (b) Disclosure Requirement.--Section 6104(b) (relating to 
inspection of annual information returns), as amended by this Act, is 
amended by adding at the end the following new sentences: ``With 
respect to any private foundation (as defined in section 509(a)), any 
information regarding the gain or loss from the sale or other 
disposition of property which is required to be furnished in order to 
calculate the tax on net investment income but which is not in summary 
form is not required to be made available to the public under this 
subsection except upon the explicit request by a member of the public 
to the Secretary .''.
    (c) Public Inspection Requirement.--Section 6104(d) (relating to 
public inspection of certain annual returns, applications for 
exemptions, and notices of status) is amended by adding at the end the 
following new paragraph:
            ``(9) Application to private foundation capital transaction 
        information.--With respect to any private foundation (as 
        defined in section 509(a)), any information regarding the gain 
        or loss from the sale or other disposition of property which is 
        required to be furnished in order to calculate the tax on net 
        investment income but which is not in summary form is not 
        required to be made available to the public under this 
        subsection except upon the explicit request by a member of the 
        public to the private foundation in the form and manner of a 
        request described in paragraph (1)(B).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to returns filed after December 31, 2002.

SEC. 204. DISCLOSURE THAT FORM 990 IS PUBLICLY AVAILABLE.

    (a) In General.--The Commissioner of the Internal Revenue shall 
notify the public in appropriate publications or other materials of the 
extent to which an exempt organization's Form 990, Form 990-EZ, or Form 
990-PF is publicly available.
    (b) Effective Date.--The amendments made by this section shall 
apply to publications or other materials issued or revised after the 
date of the enactment of this Act.

SEC. 205. DISCLOSURE TO STATE OFFICIALS OF PROPOSED ACTIONS RELATED TO 
              SECTION 501(C) ORGANIZATIONS.

    (a) In General.--Subsection (c) of section 6104 is amended by 
striking paragraph (2) and inserting the following new paragraphs:
            ``(2) Disclosure of proposed actions related to charitable 
        organizations.--
                    ``(A) Specific notifications.--In the case of an 
                organization to which paragraph (1) applies, the 
                Secretary may disclose to the appropriate State 
                officer--
                            ``(i) a notice of proposed refusal to 
                        recognize such organization as an organization 
                        described in section 501(c)(3) or a notice of 
                        proposed revocation of such organization's 
                        recognition as an organization exempt from 
                        taxation,
                            ``(ii) the issuance of a letter of proposed 
                        deficiency of tax imposed under section 507 or 
                        chapter 41 or 42, and
                            ``(iii) the names and taxpayer 
                        identification numbers of organizations which 
                        have applied for recognition as organizations 
                        described in section 501(c)(3).
                    ``(B) Additional disclosures.--Returns and return 
                information of organizations with respect to which 
                information is disclosed under subparagraph (A) may be 
                made available for inspection by or disclosed to an 
                appropriate State officer.
                    ``(C) Procedures for disclosure.--Information may 
                be inspected or disclosed under subparagraph (A) or (B) 
                only--
                            ``(i) upon written request by an 
                        appropriate State officer, and
                            ``(ii) for the purpose of, and only to the 
                        extent necessary in, the administration of 
                        State laws regulating such organizations.
                Such information may only be inspected by or disclosed 
                to representatives of the appropriate State officer 
                designated as the individuals who are to inspect or to 
                receive the returns or return information under this 
                paragraph on behalf of such officer. Such 
                representatives shall not include any independent 
                contractor.
                    ``(D) Disclosures other than by request.--The 
                Secretary may make available for inspection or disclose 
                returns and return information of an organization to 
                which paragraph (1) applies to an appropriate State 
                officer of any State if the Secretary determines that 
                such inspection or disclosure may facilitate the 
                resolution of Federal or State issues relating to the 
                tax-exempt status of such organization.
            ``(3) Disclosure with respect to certain other exempt 
        organizations.--Upon written request by an appropriate State 
        officer, the Secretary may make available for inspection or 
        disclosure returns and return information of an organization 
        described in paragraph (2), (4), (6), (7), (8), (10), or (13) 
        of section 501(c) for the purpose of, and to the extent 
        necessary in, the administration of State laws regulating the 
        tax-exempt status of such organizations. Such information may 
        be inspected only by or disclosed only to representatives of 
        the appropriate State officer designated as the individuals who 
        are to inspect or to receive the returns or return information 
        under this paragraph on behalf of such officer. Such 
        representatives shall not include any independent contractor.
            ``(4) Use in judicial and administrative proceedings.--
        Returns and return information disclosed pursuant to this 
        subsection may be disclosed in civil administrative and 
        judicial proceedings pertaining to the enforcement of State 
        laws regulating such organizations in a manner prescribed by 
        the Secretary similar to that for tax administration 
        proceedings under section 6103(h)(4).
            ``(5) No disclosure if impairment.--Returns and return 
        information shall not be disclosed under this subsection, or in 
        any proceeding described in paragraph (4), to the extent that 
        the Secretary determines that such disclosure would seriously 
        impair Federal tax administration.
            ``(6) Definitions.--For purposes of this subsection--
                    ``(A) Return and return information.--The terms 
                `return' and `return information' have the respective 
                meanings given to such terms by section 6103(b).
                    ``(B) Appropriate state officer.--The term 
                `appropriate State officer' means--
                            ``(i) the State attorney general,
                            ``(ii) in the case of an organization to 
                        which paragraph (1) applies, any other State 
                        official charged with overseeing organizations 
                        of the type described in section 501(c)(3), and
                            ``(iii) in the case of an organization to 
                        which paragraph (3) applies, the head of an 
                        agency designated by the State attorney general 
                        as having primary responsibility for overseeing 
                        the tax-exempt status of such organizations.''.
    (b) Conforming Amendments.--
            (1) Subsection (a) of section 6103 is amended--
                    (A) by inserting ``or section 6104(c)'' after 
                ``this section'' in paragraph (2), and
                    (B) by striking ``or subsection (n)'' in paragraph 
                (3) and inserting ``subsection (n), or section 
                6104(c)''.
            (2) Subparagraph (A) of section 6103(p)(3) is amended by 
        inserting ``and section 6104(c)'' after ``section'' in the 
        first sentence.
            (3) Paragraph (4) of section 6103(p) is amended--
                    (A) in the matter preceding subparagraph (A), by 
                striking ``(16) or any other person described in 
                subsection (l)(16)'' and inserting ``(16), any other 
                person described in subsection (l)(16), or any 
                appropriate State officer (as defined in section 
                6104(c))'', and
                    (B) in subparagraph (F), by striking ``or any other 
                person described in subsection (l)(16)'' and inserting 
                ``any other person described in subsection (l)(16), or 
                any appropriate State officer (as defined in section 
                6104(c))''.
            (4) The heading for paragraph (1) of section 6104(c) is 
        amended by inserting ``for charitable organizations''.
            (5) Paragraph (2) of section 7213(a) is amended by 
        inserting ``or under section 6104(c)'' after ``6103''.
            (6) Paragraph (2) of section 7213A(a) is amended by 
        inserting ``or 6104(c)'' after ``6103''.
            (7) Paragraph (2) of section 7431(a) is amended by 
        inserting ``(including any disclosure in violation of section 
        6104(c))'' after ``6103''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act but shall not apply to 
requests made before such date.

     TITLE III--OTHER CHARITABLE AND EXEMPT ORGANIZATION PROVISIONS

SEC. 301. MODIFICATION OF EXCISE TAX ON UNRELATED BUSINESS TAXABLE 
              INCOME OF CHARITABLE REMAINDER TRUSTS.

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

SEC. 302. MODIFICATIONS TO SECTION 512(B)(13).

    (a) In General.--Paragraph (13) of section 512(b) (relating to 
special rules for certain amounts received from controlled entities) is 
amended by redesignating subparagraph (E) as subparagraph (F) and by 
inserting after subparagraph (D) the following new subparagraph:
                    ``(E) Paragraph to apply only to excess payments.--
                            ``(i) In general.--Subparagraph (A) shall 
                        apply only to the portion of a specified 
                        payment received or accrued by the controlling 
                        organization that exceeds the amount which 
                        would have been paid or accrued if such payment 
                        met the requirements prescribed under section 
                        482.
                            ``(ii) Addition to tax for valuation 
                        misstatements.--The tax imposed by this chapter 
                        on the controlling organization shall be 
                        increased by an amount equal to 20 percent of 
                        the larger of--
                                    ``(I) such excess determined 
                                without regard to any amendment or 
                                supplement to a return of tax, or
                                    ``(II) such excess determined with 
                                regard to all such amendments and 
                                supplements.''.
    (b) Effective Date.--
            (1) In general.--The amendment made by this section shall 
        apply to payments received or accrued after December 31, 2000.
            (2) Payments subject to binding contract transition rule.--
        If the amendments made by section 1041 of the Taxpayer Relief 
        Act of 1997 did not apply to any amount received or accrued in 
        the first 2 taxable years beginning on or after the date of the 
        enactment of the Taxpayer Relief Act of 1997 under any contract 
        described in subsection (b)(2) of such section, such amendments 
        also shall not apply to amounts received or accrued under such 
        contract before January 1, 2001.

SEC. 303. SIMPLIFICATION OF LOBBYING EXPENDITURE LIMITATION.

    (a) Repeal of Grassroots Expenditure Limit.--Paragraph (1) of 
section 501(h) (relating to expenditures by public charities to 
influence legislation) is amended to read as follows:
            ``(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 makes lobbying 
        expenditures in excess of the lobbying ceiling amount for such 
        organization for each taxable year.''.
    (b) Excess Lobbying Expenditures.--Section 4911(b) is amended to 
read as follows:
    ``(b) Excess Lobbying Expenditures.--For purposes of this section, 
the term `excess lobbying expenditures' means, for a taxable year, the 
amount by which the lobbying expenditures made by the organization 
during the taxable year exceed the lobbying nontaxable amount for such 
organization for such taxable year.''.
    (c) Conforming Amendments.--
            (1) Section 501(h)(2) is amended by striking subparagraphs 
        (C) and (D).
            (2) Section 4911(c) is amended by striking paragraphs (3) 
        and (4).
            (3) Paragraph (1)(A) of section 4911(f) is amended by 
        striking ``limits of section 501(h)(1) have'' and inserting 
        ``limit of section 501(h)(1) has''.
            (4) Paragraph (1)(C) of section 4911(f) is amended by 
        striking ``limits of section 501(h)(1) are'' and inserting 
        ``limit of section 501(h)(1) is''.
            (5) Paragraphs (4)(A) and (4)(B) of section 4911(f) are 
        each amended by striking ``limits of section 501(h)(1)'' and 
        inserting ``limit of section 501(h)(1)''.
            (6) Paragraph (8) of section 6033(b) (relating to certain 
        organizations described in section 501(c)(3)) is amended by 
        inserting ``and'' at the end of subparagraph (A) and by 
        striking subparagraphs (C) and (D).
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 304. EXPEDITED REVIEW PROCESS FOR CERTAIN TAX-EXEMPTION 
              APPLICATIONS.

    (a) In General.--The Secretary of the Treasury or the Secretary's 
delegate (in this section, referred to as the ``Secretary'') shall 
adopt procedures to expedite the consideration of applications for 
exempt status under section 501(c)(3) of the Internal Revenue Code of 
1986 filed after December 31, 2002, by any organization that--
            (1) is organized and operated for the primary purpose of 
        providing social services;
            (2) is seeking a contract or grant under a Federal, State, 
        or local program that provides funding for social services 
        programs;
            (3) establishes that, under the terms and conditions of the 
        contract or grant program, an organization is required to 
        obtain such exempt status before the organization is eligible 
        to apply for a contract or grant;
            (4) includes with its exemption application a copy of its 
        completed Federal, State, or local contract or grant 
        application; and
            (5) meets such other criteria as the Secretary deems 
        appropriate for expedited consideration.
The Secretary may prescribe other similar circumstances in which such 
organizations may be entitled to expedited consideration.
    (b) Waiver of Application Fee for Exempt Status.--Any organization 
that meets the conditions described in subsection (a) (without regard 
to paragraph (3) of that subsection) is entitled to a waiver of any fee 
for an application for exempt status under section 501(c)(3) of the 
Internal Revenue Code of 1986 if the organization certifies that the 
organization has had (or expects to have) average annual gross receipts 
of not more than $50,000 during the preceding 4 years (or, in the case 
of an organization not in existence throughout the preceding 4 years, 
during such organization's first 4 years).
    (c) Social Services Defined.--For purposes of this section--
            (1) In general.--The term ``social services'' means 
        services directed at helping people in need, reducing poverty, 
        improving outcomes of low-income children, revitalizing low-
        income communities, and empowering low-income families and low-
        income individuals to become self-sufficient, including--
                    (A) child care services, protective services for 
                children and adults, services for children and adults 
                in foster care, adoption services, services related to 
                the management and maintenance of the home, day care 
                services for adults, and services to meet the special 
                needs of children, older individuals, and individuals 
                with disabilities (including physical, mental, or 
                emotional disabilities);
                    (B) transportation services;
                    (C) job training and related services, and 
                employment services;
                    (D) information, referral, and counseling services;
                    (E) the preparation and delivery of meals, and 
                services related to soup kitchens or food banks;
                    (F) health support services;
                    (G) literacy and mentoring programs;
                    (H) services for the prevention and treatment of 
                juvenile delinquency and substance abuse, services for 
                the prevention of crime and the provision of assistance 
                to the victims and the families of criminal offenders, 
                and services related to the intervention in, and 
                prevention of, domestic violence; and
                    (I) services related to the provision of assistance 
                for housing under Federal law.
            (2) Exclusions.--The term does not include a program having 
        the purpose of delivering educational assistance under the 
        Elementary and Secondary Education Act of 1965 (20 U.S.C. 6301 
        et seq.) or under the Higher Education Act of 1965 (20 U.S.C. 
        1001 et seq.).

SEC. 305. CLARIFICATION OF DEFINITION OF CHURCH TAX INQUIRY.

    Subsection (i) of section 7611 (relating to section not to apply to 
criminal investigations, etc.) is amended by striking ``or'' at the end 
of paragraph (4), by striking the period at the end of paragraph (5) 
and inserting ``, or'', and by inserting after paragraph (5) the 
following:
            ``(6) information provided by the Secretary related to the 
        standards for exemption from tax under this title and the 
        requirements under this title relating to unrelated business 
        taxable income.''.

SEC. 306. EXPANSION OF DECLARATORY JUDGMENT REMEDY TO TAX-EXEMPT 
              ORGANIZATIONS.

    (a) In General.--Paragraph (1) of section 7428(a) (relating to 
creation of remedy) is amended--
            (1) in subparagraph (B) by inserting after ``509(a))'' the 
        following: ``or as a private operating foundation (as defined 
        in section 4942(j)(3))''; and
            (2) by amending subparagraph (C) to read as follows:
                    ``(C) with respect to the initial qualification or 
                continuing qualification of an organization as an 
                organization described in section 501(c) (other than 
                paragraph (3)) which is exempt from tax under section 
                501(a), or''.
    (b) Court Jurisdiction.--Subsection (a) of section 7428 is amended 
in the material following paragraph (2) by striking ``United States Tax 
Court, the United States Claims Court, or the district court of the 
United States for the District of Columbia'' and inserting the 
following: ``United States Tax Court (in the case of any such 
determination or failure) or the United States Claims Court or the 
district court of the United States for the District of Columbia (in 
the case of a determination or failure with respect to an issue 
referred to in subparagraph (A) or (B) of paragraph (1)),''.
    (c) Effective Date.--The amendments made by this section shall 
apply to pleadings filed with respect to determinations made after 
December 31, 2001.

SEC. 307. DEFINITION OF CONVENTION OR ASSOCIATION OF CHURCHES.

    Section 7701 (relating to definitions) is amended by redesignating 
subsection (n) as subsection (o) and by inserting after subsection (m) 
the following new subsection:
    ``(n) Convention or association of churches.--For purposes of this 
title, any organization which is otherwise a convention or association 
of churches shall not fail to so qualify merely because the membership 
of such organization includes individuals as well as churches or 
because individuals have voting rights in such organization.''.

SEC. 308. CHARITABLE CONTRIBUTION DEDUCTION FOR CERTAIN EXPENSES 
              INCURRED IN SUPPORT OF NATIVE ALASKAN SUBSISTENCE 
              WHALING.

    (a) In General.--Section 170 (relating to charitable, etc., 
contributions and gifts), as amended by this Act, is amended by 
redesignating subsection (n) as subsection (o) and by inserting after 
subsection (m) the following new subsection:
    ``(n) Expenses Paid by Certain Whaling Captains in Support of 
Native Alaskan Subsistence Whaling.--
            ``(1) In general.--In the case of an individual who is 
        recognized by the Alaska Eskimo Whaling Commission as a whaling 
        captain charged with the responsibility of maintaining and 
        carrying out sanctioned whaling activities and who engages in 
        such activities during the taxable year, the amount described 
        in paragraph (2) (to the extent such amount does not exceed 
        $7,500 for the taxable year) shall be treated for purposes of 
        this section as a charitable contribution.
            ``(2) Amount described.--
                    ``(A) In general.--The amount described in this 
                paragraph is the aggregate of the reasonable and 
                necessary whaling expenses paid by the taxpayer during 
                the taxable year in carrying out sanctioned whaling 
                activities.
                    ``(B) Whaling expenses.--For purposes of 
                subparagraph (A), the term `whaling expenses' includes 
                expenses for--
                            ``(i) the acquisition and maintenance of 
                        whaling boats, weapons, and gear used in 
                        sanctioned whaling activities,
                            ``(ii) the supplying of food for the crew 
                        and other provisions for carrying out such 
                        activities, and
                            ``(iii) storage and distribution of the 
                        catch from such activities.
            ``(3) Sanctioned whaling activities.--For purposes of this 
        subsection, the term `sanctioned whaling activities' means 
        subsistence bowhead whale hunting activities conducted pursuant 
        to the management plan of the Alaska Eskimo Whaling 
        Commission.''
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to expenses paid after December 31, 2002, in taxable years ending 
after such date.

SEC. 309. PAYMENTS BY CHARITABLE ORGANIZATIONS TO VICTIMS OF WAR ON 
              TERRORISM.

    (a) In General.--For purposes of the Internal Revenue Code of 
1986--
            (1) payments made by an organization described in section 
        501(c)(3) of such Code to a member of the Armed Forces of the 
        United States, or to an individual of such member's immediate 
        family by reason of the death, injury, wounding, or illness of 
        such member incurred as the result of the military response of 
        the United States to the terrorist attacks against the United 
        States on September 11, 2001, shall be treated as related to 
        the purpose or function constituting the basis for such 
        organization's exemption under section 501 of such Code if such 
        payments are made using an objective formula which is 
        consistently applied, and
            (2) in the case of a private foundation (as defined in 
        section 509 of such Code), any payment described in paragraph 
        (1) shall not be treated as made to a disqualified person for 
        purposes of section 4941 of such Code.
    (b) Effective Date.--This section shall apply to payments made 
after the date of the enactment of this Act and before September 11, 
2003.

SEC. 310. TREATMENT OF BONDS ISSUED TO ACQUIRE STANDING TIMBER ON LAND 
              SUBJECT TO CONSERVATION EASEMENT.

    (a) In General.--Section 145 (defining qualified 501(c)(3) bond) is 
amended by redesignating subsection (e) as subsection (f) and by 
inserting after subsection (d) the following new subsection:
    ``(e) Bonds Issued To Acquire Standing Timber on Land Subject to 
Conservation Easement.--
            ``(1) In general.--A bond to which this subsection applies 
        shall not fail to be a qualified 501(c)(3) bond by reason of 
        the sale, lease, or other use of standing timber if--
                    ``(A) such sale, lease, or other use does not 
                constitute an unrelated trade or business (determined 
                by applying section 513(a)),
                    ``(B) the bond is designated by the Secretary for 
                purposes of this subsection, and
                    ``(C) the bond otherwise meets the requirements of 
                this subsection.
            ``(2) Bonds to which subsection applies.--This subsection 
        applies to bonds the proceeds of which are used to acquire both 
        land and any standing timber associated with such land from an 
        unrelated person if--
                    ``(A) such land is subject to a conservation 
                restriction which--
                            ``(i) is granted in perpetuity to an 
                        unrelated person which is a qualified 
                        organization (as defined in section 170(h)(3)),
                            ``(ii) meets the requirements of clause 
                        (ii) or (iii)(II) of section 170(h)(4)(A), and
                            ``(iii) obligates the owner of such land to 
                        pay the costs incurred by the holder of the 
                        conservation restriction in monitoring 
                        compliance with such restriction, and
                    ``(B) the seller irrevocably elects not to exclude 
                from income any gain on the sale under section 121A.
            ``(3) Treatment of timber, etc.--
                    ``(A) In general.--For purposes of subsection (a), 
                the cost of any standing timber acquired with proceeds 
                of such bonds shall be treated as a cost of acquiring 
                the land associated with the standing timber and such 
                land shall not be treated as used for a private 
                business use because of the sale or lease of the 
                standing timber to, or other use of the standing timber 
                by, an unrelated person to the extent that such sale, 
                lease, or other use does not constitute an unrelated 
                trade or business, determined by applying section 
                513(a).
                    ``(B) Application of bond maturity limitation.--For 
                purposes of section 147(b), the land or standing timber 
                acquired with proceeds of such bonds shall have an 
                economic life of 35 years.
                    ``(C) Unrelated person.--For purposes of this 
                subsection, a person shall be treated as unrelated to--
                            ``(i) an organization to which section 501 
                        applies, if such person (or, if such person is 
                        an individual, a member of such person's 
                        family) controls directly or indirectly less 
                        than 20 percent of the governing body of such 
                        organization,
                            ``(ii) a corporation, if such person owns 
                        directly or indirectly less than 20 percent of 
                        the value of the outstanding stock of such 
                        corporation, or
                            ``(iii) a partnership, if such person owns 
                        directly or indirectly less than 20 percent of 
                        the capital interests or profit interests of 
                        such partnership.
            ``(4) Limitation on amount of bonds designated.--
                    ``(A) In general.--The aggregate amount of bonds 
                (including any bond (or series of bonds) used to 
                advance refund such bonds) which may be designated for 
                purposes of this subsection under paragraph (1)(B) 
                shall not exceed $2,000,000,000.
                    ``(B) No designation after 2005.--No bonds may be 
                so designated after 2005.
                    ``(C) Allocation of limitation.--The limitation 
                described in subparagraph (A) shall be allocated by the 
                Secretary among 501(c)(3) organizations based on 
                criteria established by the Secretary after 
                consultation with appropriate Federal, State, and local 
                officials.
                    ``(D) Treatment of current refunding bonds.--Any 
                bond (or series of bonds) issued to refund a bond 
                designated and issued before January 1, 2006, shall be 
                treated as designated for purposes of this subsection 
                under paragraph (1)(B) and shall not be taken into 
                account in applying subparagraph (A) or (B) of this 
                paragraph if--
                            ``(i) the amount of the refunding bond does 
                        not exceed the outstanding amount of the 
                        refunded bond, and
                            ``(ii) the net proceeds of the refunding 
                        bond are used to redeem the refunded bond not 
                        later than 90 days after the date of the 
                        issuance of the refunding bond.
            ``(5) Termination.--This subsection shall not apply to any 
        bond (other than a refunding bond described in paragraph 
        (4)(D)) issued after December 31, 2005.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to bonds issued after September 30, 2002.

SEC. 311. EXEMPTION FROM INCOME TAX FOR STATE-CREATED ORGANIZATIONS 
              PROVIDING PROPERTY AND CASUALTY INSURANCE FOR PROPERTY 
              FOR WHICH SUCH COVERAGE IS OTHERWISE UNAVAILABLE.

    (a) In General.--Subsection (c) of section 501 (relating to 
exemption from tax on corporations, certain trusts, etc.) is amended by 
adding at the end the following new paragraph:
            ``(29)(A) Any association created before January 1, 1999, 
        by State law and organized and operated exclusively to provide 
        property and casualty insurance coverage for windstorm, hail, 
        and fire damage to property located within the State for which 
        the State determines, through appropriate State action, that 
        such coverage in the authorized insurance market is not 
        reasonably available to a substantial number of insurable real 
        properties (and any successor association) if--
                    ``(i) no part of the net earnings of which inures 
                to the benefit of any private shareholder or 
                individual,
                    ``(ii) except as provided in clause (v), no part of 
                the assets of which may be used for, or diverted to, 
                any purpose other than--
                            ``(I) to satisfy, in whole or in part, the 
                        liability of the association for, or with 
                        respect to, claims made on policies written by 
                        the association,
                            ``(II) to invest in investments authorized 
                        by applicable law,
                            ``(III) to pay reasonable and necessary 
                        administration expenses in connection with the 
                        establishment and operation of the association 
                        and the processing of claims against the 
                        association, or
                            ``(IV) to make remittances pursuant to 
                        State law to be used by the State to provide 
                        for the payment of claims on policies written 
                        by the association, purchase reinsurance 
                        covering losses under such policies, or to 
                        support governmental programs to prepare for or 
                        mitigate the effects of natural catastrophic 
                        events,
                    ``(iii) the State law governing the association 
                permits the association to levy assessments on 
                insurance companies authorized to sell property and 
                casualty insurance in the State, or on property and 
                casualty insurance policyholders with insurable 
                interests in property located in the State to fund 
                deficits of the association, including the creation of 
                reserves,
                    ``(iv) the plan of operation of the association is 
                subject to approval by the chief executive officer or 
                other official of the State, by the State legislature, 
                or both, and
                    ``(v) the assets of the association revert upon 
                dissolution to the State, the State's designee, or an 
                entity designated by the State law governing the 
                association, or State law does not permit the 
                dissolution of the association.
            ``(B)(i) An entity described in clause (ii) (and any 
        successor entity) shall be disregarded as a separate entity and 
        treated as part of the association described in subparagraph 
        (A) from which it receives remittances described in clause (ii) 
        if an election is made within 30 days after the date that such 
        association is determined to be exempt from tax.
            ``(ii) An entity is described in this clause if it is an 
        entity or fund created before January 1, 1999, pursuant to 
        State law and organized and operated exclusively to receive, 
        hold, and invest remittances from an association described in 
        subparagraph (A) and exempt from tax under subsection (a), to 
        make disbursements to pay claims on insurance contracts issued 
        by such association, and to make disbursements to support 
        governmental programs to prepare for or mitigate the effects of 
        natural catastrophic events.''.
    (b) Unrelated Business Taxable Income.--Subsection (a) of section 
512 (relating to unrelated business taxable income) is amended by 
adding at the end the following new paragraph:
            ``(6) Special rule applicable to organizations described in 
        section 501(c)(29)--In the case of an organization described in 
        section 501(c)(29), the term `unrelated business taxable 
        income' means taxable income for a taxable year computed 
        without the application of section 501(c)(29) if at the end of 
        the immediately preceding taxable year the organization's net 
        equity exceeded 15 percent of the total coverage in force under 
        insurance contracts issued by the organization and outstanding 
        at the end of such preceding year.''.
    (c) Transitional Rule.--No income or gain shall be recognized by an 
association as a result of a change in status to that of an association 
described by section 501(c)(29) of the Internal Revenue Code of 1986, 
as amended by subsection (a).
    (d) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2002.

SEC. 312. MODIFICATION OF SPECIAL ARBITRAGE RULE FOR CERTAIN FUNDS.

    (a) In General.--Paragraph (1) of section 648 of the Deficit 
Reduction Act of 1984 is amended to read as follows:
            ``(1) such securities or obligations are held in a fund--
                    ``(A) which, except to the extent of the investment 
                earnings on such securities or obligations, cannot be 
                used, under State constitutional or statutory 
                restrictions continuously in effect since October 9, 
                1969, through the date of issue of the bond issue, to 
                pay debt service on the bond issue or to finance the 
                facilities that are to be financed with the proceeds of 
                the bonds, or
                    ``(B) the annual distributions from which cannot 
                exceed 7 percent of the average fair market value of 
                the assets held in such fund except to the extent 
                distributions are necessary to pay debt service on the 
                bond issue,''.
    (b) Conforming Amendment.--Section 648(3) of such Act is amended by 
striking ``the investment earnings of'' and inserting ``distributions 
from''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 313. MATCHING GRANTS TO LOW-INCOME TAXPAYER CLINICS FOR RETURN 
              PREPARATION.

    (a) In General.--Chapter 77 (relating to miscellaneous provisions) 
is amended by adding at the end the following new section:

``SEC. 7527. ASSISTANCE FOR RETURN PREPARATION FOR LOW-INCOME 
              TAXPAYERS.

    ``(a) In General.--The Secretary may, subject to the availability 
of appropriated funds, make grants to provide matching funds to not-
for-profit organizations described in section 501(c) and exempt from 
taxation under section 501(a) which assist low-income taxpayers in tax 
return preparation.
    ``(b) Aggregate Limitation.--Unless otherwise provided by specific 
appropriation, the Secretary shall not allocate more than $10,000,000 
per year (exclusive of costs of administering the program) to grants 
under this section.
    ``(c) Requirement of Matching Funds.--A not-for-profit organization 
must provide matching funds on a dollar-for-dollar basis for all grants 
provided under this section. Matching funds may include--
            ``(1) the salary (including fringe benefits) of individuals 
        performing tax return preparation services for the 
        organization; and
            ``(2) the cost of equipment used by the organization.
Indirect expenses, including general overhead of the organization, 
shall not be counted as matching funds.''.
    (b) Clerical Amendment.--The table of sections for chapter 77 is 
amended by adding at the end the following new item:

                              ``Sec. 7527. Assistance for return 
                                        preparation for low-income 
                                        taxpayers.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 314. MODIFICATION OF SCHOLARSHIP FOUNDATION RULES.

    In applying the limitations on the percentage of scholarship grants 
which may be awarded after December 31, 2002, to children of employees 
under Revenue Procedure 76-47, such percentage shall be increased to 35 
percent of the eligible applicants to be considered by the selection 
committee and to 20 percent of individuals eligible for the grants, but 
only if the foundation awarding the grants demonstrates that, in 
addition to meeting the other requirements of Revenue Procedure 76-47, 
it provides a comparable number and aggregate amount of grants during 
the same program year to children who are not children of current or 
former employees.

                 TITLE IV--SOCIAL SERVICES BLOCK GRANT

SEC. 401. RESTORATION OF FUNDS FOR THE SOCIAL SERVICES BLOCK GRANT.

    (a) Findings.--Congress makes the following findings:
            (1) On August 22, 1996, the Personal Responsibility and 
        Work Opportunity Reconciliation Act of 1996 (Public Law 104-
        193; 110 Stat. 2105) was signed into law.
            (2) In enacting that law, Congress authorized 
        $2,800,000,000 for fiscal year 2003 and each fiscal year 
        thereafter to carry out the Social Services Block Grant program 
        established under title XX of the Social Security Act (42 
        U.S.C. 1397 et seq.).
    (b) Restoration of Funds.--Section 2003(c)(11) of the Social 
Security Act (42 U.S.C. 1397b(c)(11)) is amended by inserting ``, 
except that, with respect to fiscal year 2003, the amount shall be 
$1,975,000,000, and with respect to fiscal year 2004, the amount shall 
be $2,800,000,000'' after ``thereafter.''.

SEC. 402. RESTORATION OF AUTHORITY TO TRANSFER UP TO 10 PERCENT OF TANF 
              FUNDS TO THE SOCIAL SERVICES BLOCK GRANT.

    (a) In General.--Section 404(d)(2) of the Social Security Act (42 
U.S.C. 604(d)(2)) is amended to read as follows:
            ``(2) Limitation on amount transferable to title xx 
        programs.--A State may use not more than 10 percent of the 
        amount of any grant made to the State under section 403(a) for 
        a fiscal year to carry out State programs pursuant to title 
        XX.''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to amounts made available for fiscal year 2003 and each fiscal year 
thereafter.

SEC. 403. REQUIREMENT TO SUBMIT ANNUAL REPORT ON STATE ACTIVITIES.

    (a) In General.--Section 2006(c) of the Social Security Act (42 
U.S.C. 1397e(c)) is amended by adding at the end the following: ``The 
Secretary shall compile the information submitted by the States and 
submit that information to Congress on an annual basis.''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to information submitted by States under section 2006 of the Social 
Security Act (42 U.S.C. 1397e) with respect to fiscal year 2002 and 
each fiscal year thereafter.

                TITLE V--INDIVIDUAL DEVELOPMENT ACCOUNTS

SEC. 501. SHORT TITLE.

    This title may be cited as the ``Savings for Working Families Act 
of 2002''.

SEC. 502. PURPOSES.

    The purposes of this title are to provide for the establishment of 
individual development account programs that will--
            (1) provide individuals and families with limited means an 
        opportunity to accumulate assets and to enter the financial 
        mainstream,
            (2) promote education, homeownership, and the development 
        of small businesses,
            (3) stabilize families and build communities, and
            (4) support continued United States economic expansion.

SEC. 503. DEFINITIONS.

    As used in this title:
            (1) Eligible individual.--
                    (A) In general.--The term ``eligible individual'' 
                means, with respect to any taxable year, an individual 
                who--
                            (i) has attained the age of 18 but not the 
                        age of 61 as of the last day of such taxable 
                        year,
                            (ii) is a citizen or lawful permanent 
                        resident (within the meaning of section 
                        7701(b)(6) of the Internal Revenue Code of 
                        1986) of the United States as of the last day 
                        of such taxable year,
                            (iii) was not a student (as defined in 
                        section 151(c)(4) of such Code) for the 
                        immediately preceding taxable year,
                            (iv) is not an individual with respect to 
                        whom a deduction under section 151 of such Code 
                        is allowable to another taxpayer for a taxable 
                        year of the other taxpayer ending during the 
                        immediately preceding taxable year of the 
                        individual,
                            (v) is not a taxpayer described in section 
                        1(d) of such Code for the immediately preceding 
                        taxable year, and
                            (vi) is a taxpayer the modified adjusted 
                        gross income of whom for the immediately 
                        preceding taxable year does not exceed--
                                    (I) $18,000, in the case of a 
                                taxpayer described in section 1(c) of 
                                such Code,
                                    (II) $30,000, in the case of a 
                                taxpayer described in section 1(b) of 
                                such Code, and
                                    (III) $38,000, in the case of a 
                                taxpayer described in section 1(a) of 
                                such Code.
                    (B) Inflation adjustment.--
                            (i) In general.--In the case of any taxable 
                        year beginning after 2004, each dollar amount 
                        referred to in subparagraph (A)(vi) shall be 
                        increased by an amount equal to--
                                    (I) such dollar amount, multiplied 
                                by
                                    (II) the cost-of-living adjustment 
                                determined under section (1)(f)(3) of 
                                the Internal Revenue Code of 1986 for 
                                the calendar year in which the taxable 
                                year begins, by substituting ``2003'' 
                                for ``1992''.
                            (ii) Rounding.--If any amount as adjusted 
                        under clause (i) is not a multiple of $50, such 
                        amount shall be rounded to the nearest multiple 
                        of $50.
                    (C) Modified adjusted gross income.--For purposes 
                of subparagraph (A)(v), the term ``modified adjusted 
                gross income'' means adjusted gross income--
                            (i) determined without regard to sections 
                        86, 893, 911, 931, and 933 of the Internal 
                        Revenue Code of 1986, and
                            (ii) increased by the amount of interest 
                        received or accrued by the taxpayer during the 
                        taxable year which is exempt from tax.
            (2) Individual development account.--The term ``Individual 
        Development Account'' means an account established for an 
        eligible individual as part of a qualified individual 
        development account program, but only if the written governing 
        instrument creating the account meets the following 
        requirements:
                    (A) The owner of the account is the individual for 
                whom the account was established.
                    (B) No contribution will be accepted unless it is 
                in cash.
                    (C) The trustee of the account is a qualified 
                financial institution.
                    (D) The assets of the account will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
                    (E) Except as provided in section 507(b), any 
                amount in the account may be paid out only for the 
                purpose of paying the qualified expenses of the account 
                owner.
            (3) Parallel account.--The term ``parallel account'' means 
        a separate, parallel individual or pooled account for all 
        matching funds and earnings dedicated to an Individual 
        Development Account owner as part of a qualified individual 
        development account program, the trustee of which is a 
        qualified financial institution.
            (4) Qualified financial institution.--The term ``qualified 
        financial institution'' means any person authorized to be a 
        trustee of any individual retirement account under section 
        408(a)(2) of the Internal Revenue Code of 1986.
            (5) Qualified individual development account program.--The 
        term ``qualified individual development account program'' means 
        a program established upon approval of the Secretary under 
        section 504 after December 31, 2002, under which--
                    (A) Individual Development Accounts and parallel 
                accounts are held in trust by a qualified financial 
                institution, and
                    (B) additional activities determined by the 
                Secretary, in consultation with the Secretary of Health 
                and Human Services, as necessary to responsibly develop 
                and administer accounts, including recruiting, 
                providing financial education and other training to 
                Account owners, and regular program monitoring, are 
                carried out by the qualified financial institution.
            (6) Qualified expense distribution.--
                    (A) In general.--The term ``qualified expense 
                distribution'' means any amount paid (including through 
                electronic payments) or distributed out of an 
                Individual Development Account or a parallel account 
                established for an eligible individual if such amount--
                            (i) is used exclusively to pay the 
                        qualified expenses of the Individual 
                        Development Account owner or such owner's 
                        spouse or dependents,
                            (ii) is paid by the qualified financial 
                        institution--
                                    (I) except as otherwise provided in 
                                this clause, directly to the unrelated 
                                third party to whom the amount is due,
                                    (II) in the case of any qualified 
                                rollover, directly to another 
                                Individual Development Account and 
                                parallel account, or
                                    (III) in the case of a qualified 
                                final distribution, directly to the 
                                spouse, dependent, or other named 
                                beneficiary of the deceased Account 
                                owner, and
                            (iii) is paid after the Account owner has 
                        completed a financial education course if 
                        required under section 505(b).
                    (B) Qualified expenses.--
                            (i) In general.--The term ``qualified 
                        expenses'' means any of the following expenses 
                        approved by the qualified financial 
                        institution:
                                    (I) Qualified higher education 
                                expenses.
                                    (II) Qualified first-time homebuyer 
                                costs.
                                    (III) Qualified business 
                                capitalization or expansion costs.
                                    (IV) Qualified rollovers.
                                    (V) Qualified final distribution.
                            (ii) Qualified higher education expenses.--
                                    (I) In general.--The term 
                                ``qualified higher education expenses'' 
                                has the meaning given such term by 
                                section 529(e)(3) of the Internal 
                                Revenue Code of 1986, determined by 
                                treating the Account owner, the owner's 
                                spouse, or one or more of the owner's 
                                dependents as a designated beneficiary, 
                                and reduced as provided in section 
                                25A(g)(2) of such Code.
                                    (II) Coordination with other 
                                benefits.--The amount of expenses which 
                                may be taken into account for purposes 
                                of section 135, 529, or 530 of such 
                                Code for any taxable year shall be 
                                reduced by the amount of any qualified 
                                higher education expenses taken into 
                                account as qualified expense 
                                distributions during such taxable year.
                            (iii) Qualified first-time homebuyer 
                        costs.--The term ``qualified first-time 
                        homebuyer costs'' means qualified acquisition 
                        costs (as defined in section 72(t)(8)(C) of the 
                        Internal Revenue Code of 1986) with respect to 
                        a principal residence (within the meaning of 
                        section 121 of such Code) for a qualified 
                        first-time homebuyer (as defined in section 
                        72(t)(8)(D)(i) of such Code).
                            (iv) Qualified business capitalization or 
                        expansion costs.--
                                    (I) In general.--The term 
                                ``qualified business capitalization or 
                                expansion costs'' means qualified 
                                expenditures for the capitalization or 
                                expansion of a qualified business 
                                pursuant to a qualified business plan.
                                    (II) Qualified expenditures.--The 
                                term ``qualified expenditures'' means 
                                expenditures normally associated with 
                                starting or expanding a business and 
                                included in a qualified business plan, 
                                including costs for capital, plant, and 
                                equipment, inventory expenses, and 
                                attorney and accounting fees.
                                    (III) Qualified business.--The term 
                                ``qualified business'' means any 
                                business that does not contravene any 
                                law.
                                    (IV) Qualified business plan.--The 
                                term ``qualified business plan'' means 
                                a business plan which has been approved 
                                by the qualified financial institution 
                                and which meets such requirements as 
                                the Secretary may specify.
                            (v) Qualified rollovers.--The term 
                        ``qualified rollover'' means the complete 
                        distribution of the amounts in an Individual 
                        Development Account and parallel account to 
                        another Individual Development Account and 
                        parallel account established in another 
                        qualified financial institution for the benefit 
                        of the Account owner.
                            (vi) Qualified final distribution.--The 
                        term ``qualified final distribution'' means, in 
                        the case of a deceased Account owner, the 
                        complete distribution of the amounts in the 
                        Individual Development Account and parallel 
                        account directly to the spouse, any dependent, 
                        or other named beneficiary of the deceased.
            (7) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.

SEC. 504. STRUCTURE AND ADMINISTRATION OF QUALIFIED INDIVIDUAL 
              DEVELOPMENT ACCOUNT PROGRAMS.

    (a) Establishment of Qualified Individual Development Account 
Programs.--Any qualified financial institution may apply to the 
Secretary for approval to establish 1 or more qualified individual 
development account programs which meet the requirements of this title 
and for an allocation of the Individual Development Account limitation 
under section 45G(i)(3) of the Internal Revenue Code of 1986 with 
respect to such programs.
    (b) Basic Program Structure.--
            (1) In general.--All qualified individual development 
        account programs shall consist of the following 2 components 
        for each participant:
                    (A) An Individual Development Account to which an 
                eligible individual may contribute cash in accordance 
                with section 505.
                    (B) A parallel account to which all matching funds 
                shall be deposited in accordance with section 506.
            (2) Tailored ida programs.--A qualified financial 
        institution may tailor its qualified individual development 
        account program to allow matching funds to be spent on 1 or 
        more of the categories of qualified expenses.
    (c) Coordination With Public Housing Agency Individual Savings 
Accounts.--Section 3(e)(2) of the United States Housing Act of 1937 (42 
U.S.C. 1437a(e)(2)) is amended by inserting ``or in any Individual 
Development Account established under the Savings for Working Families 
Act of 2002'' after ``subsection''.
    (d) Tax Treatment of Parallel Accounts.--
            (1) In general.--Chapter 77 of the Internal Revenue Code of 
        1986 (relating to miscellaneous provisions) is amended by 
        adding at the end the following new section:

``SEC. 7525. TAX INCENTIVES FOR INDIVIDUAL DEVELOPMENT PARALLEL 
              ACCOUNTS.

    ``For purposes of this title--
            ``(1) any account described in section 504(b)(1)(B) of the 
        Savings for Working Families Act of 2002 shall be exempt from 
        taxation,
            ``(2) except as provided in section 45G, no item of income, 
        expense, basis, gain, or loss with respect to such an account 
        may be taken into account, and
            ``(3) any amount withdrawn from such an account shall not 
        be includible in gross income.''.
            (2) Conforming amendment.--The table of sections for 
        chapter 77 of such Code is amended by adding at the end the 
        following new item:

                              ``Sec. 7525. Tax incentives for 
                                        individual development parallel 
                                        accounts.''.
    (e) Coordination of certain expenses.--Section 25A(g)(2) of the 
Internal Revenue Code of 1986 is amended by striking ``and'' at the end 
of subparagraph (C), by striking the period at the end of subparagraph 
(D) and inserting ``, and'', and by adding at the end the following new 
subparagraph:
                    ``(D) a qualified expense distribution with respect 
                to qualified higher education expenses from an 
                Individual Development Account or a parallel account 
                under section 507(a) of the Savings for Working 
                Families Act of 2002.

SEC. 505. PROCEDURES FOR OPENING AND MAINTAINING AN INDIVIDUAL 
              DEVELOPMENT ACCOUNT AND QUALIFYING FOR MATCHING FUNDS.

    (a) Opening an Account.--An eligible individual may open an 
Individual Development Account with a qualified financial institution 
upon certification that such individual has never maintained any other 
Individual Development Account (other than an Individual Development 
Account to be terminated by a qualified rollover).
    (b) Required Completion of Financial Education Course.--
            (1) In general.--Before becoming eligible to withdraw funds 
        to pay for qualified expenses, owners of Individual Development 
        Accounts must complete 1 or more financial education courses 
        specified in the qualified individual development account 
        program.
            (2) Standard and applicability of course.--The Secretary, 
        in consultation with representatives of qualified individual 
        development account programs and financial educators, shall not 
        later than January 1, 2004, establish minimum quality standards 
        for the contents of financial education courses and providers 
        of such courses described in paragraph (1) and a protocol to 
        exempt individuals from the requirement under paragraph (1) in 
        the case of hardship, lack of need, the attainment of age 61, 
        or a qualified final distribution.
    (c) Proof of Status as an Eligible Individual.--Federal income tax 
forms for the immediately preceding taxable year and any other evidence 
of eligibility which may be required by a qualified financial 
institution shall be presented to such institution at the time of the 
establishment of the Individual Development Account and in any taxable 
year in which contributions are made to the Account to qualify for 
matching funds under section 506(b)(1)(A).
    (d) Special Rule in the Case of Married Individuals.--For purposes 
of this title, if, with respect to any taxable year, 2 married 
individuals file a Federal joint income tax return, then not more than 
1 of such individuals may be treated as an eligible individual with 
respect to the succeeding taxable year.

SEC. 506. DEPOSITS BY QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT 
              PROGRAMS.

    (a) Parallel Accounts.--The qualified financial institution shall 
deposit all matching funds for each Individual Development Account into 
a parallel account at a qualified financial institution.
    (b) Regular Deposits of Matching Funds.--
            (1) In general.--Subject to paragraph (2), the qualified 
        financial institution shall deposit into the parallel account 
        with respect to each eligible individual the following amounts:
                    (A) A dollar-for-dollar match for the first $500 
                contributed by the eligible individual into an 
                Individual Development Account with respect to any 
                taxable year of such individual.
                    (B) Any matching funds provided by State, local, or 
                private sources in accordance with the matching ratio 
                set by those sources.
            (2) Timing of deposits.--A deposit of the amounts described 
        in paragraph (1) shall be made into a parallel account--
                    (A) in the case of amounts described in paragraph 
                (1)(A), not later than 30 days after the end of the 
                calendar quarter during which the contribution 
                described in such paragraph was made, and
                    (B) in the case of amounts described in paragraph 
                (1)(B), not later than 2 business days after such 
                amounts were provided.
            (3) Cross reference.--

                                For allowance of tax credit for 
Individual Development Account subsidies, including matching funds, see 
section 45G of the Internal Revenue Code of 1986.
    (c) Deposit of Matching Funds Into Individual Development Account 
of Individual Who Has Attained Age 61.--In the case of an Individual 
Development Account owner who attains the age of 61, the qualified 
financial institution shall deposit the funds in the parallel account 
with respect to such individual into the Individual Development Account 
of such individual on the later of--
            (1) the day which is the 1-year anniversary of the deposit 
        of such funds in the parallel account, or
            (2) the first business day of the taxable year of such 
        individual following the taxable year in which such individual 
        attained age 61.
    (d) Uniform Accounting Regulations.--To ensure proper recordkeeping 
and determination of the tax credit under section 45G of the Internal 
Revenue Code of 1986, the Secretary shall prescribe regulations with 
respect to accounting for matching funds in the parallel accounts.
    (e) Regular Reporting of Accounts.--Any qualified financial 
institution shall report the balances in any Individual Development 
Account and parallel account of an individual on not less than an 
annual basis to such individual.

SEC. 507. WITHDRAWAL PROCEDURES.

    (a) Withdrawals for Qualified Expenses.--
            (1) In general.--An Individual Development Account owner 
        may withdraw funds in order to pay qualified expense 
        distributions from such individual's--
                    (A) Individual Development Account, but only from 
                funds which have been on deposit in such Account for at 
                least 1 year, and
                    (B) parallel account, but only--
                            (i) from matching funds which have been on 
                        deposit in such parallel account for at least 1 
                        year,
                            (ii) from earnings in such parallel 
                        account, after all matching funds described in 
                        clause (i) have been withdrawn, and
                            (iii) to the extent such withdrawal does 
                        not result in a remaining balance in such 
                        parallel account which is less than the 
                        remaining balance in the Individual Development 
                        Account after such withdrawal.
            (2) Procedure.--Upon receipt of a withdrawal request which 
        meets the requirements of paragraph (1), the qualified 
        financial institution shall directly transfer the funds 
        electronically to the distributees described in section 
        503(6)(A)(ii). If a distributee is not equipped to receive 
        funds electronically, the qualified financial institution may 
        issue such funds by paper check to the distributee.
    (b) Withdrawals for Nonqualified Expenses.--An Individual 
Development Account owner may withdraw any amount of funds from the 
Individual Development Account for purposes other than to pay qualified 
expense distributions, but if, after such withdrawal, the amount in the 
parallel account of such owner (excluding earnings on matching funds) 
exceeds the amount remaining in such Individual Development Account, 
then such owner shall forfeit from the parallel account the lesser of 
such excess or the amount withdrawn.
    (c) Withdrawals From Accounts of Noneligible Individuals.--If the 
individual for whose benefit an Individual Development Account is 
established ceases to be an eligible individual, such account shall 
remain an Individual Development Account, but such individual shall not 
be eligible for any further matching funds under section 506(b)(1)(A) 
for contributions which are made to the Account during any taxable year 
when such individual is not an eligible individual.
    (d) Effect of Pledging Account as Security.--If, during any taxable 
year of the individual for whose benefit an Individual Development 
Account is established, that individual uses the Account, the 
individual's parallel account, or any portion thereof as security for a 
loan, the portion so used shall be treated as a withdrawal of such 
portion from the Individual Development Account for purposes other than 
to pay qualified expenses.

SEC. 508. CERTIFICATION AND TERMINATION OF QUALIFIED INDIVIDUAL 
              DEVELOPMENT ACCOUNT PROGRAMS.

    (a) Certification Procedures.--Upon establishing a qualified 
individual development account program under section 504, a qualified 
financial institution shall certify to the Secretary at such time and 
in such manner as may be prescribed by the Secretary and accompanied by 
any documentation required by the Secretary, that--
            (1) the accounts described in subparagraphs (A) and (B) of 
        section 504(b)(1) are operating pursuant to all the provisions 
        of this title, and
            (2) the qualified financial institution agrees to implement 
        an information system necessary to monitor the cost and 
        outcomes of the qualified individual development account 
        program.
    (b) Authority To Terminate Qualified IDA Program.--If the Secretary 
determines that a qualified financial institution under this title is 
not operating a qualified individual development account program in 
accordance with the requirements of this title (and has not implemented 
any corrective recommendations directed by the Secretary), the 
Secretary shall terminate such institution's authority to conduct the 
program. If the Secretary is unable to identify a qualified financial 
institution to assume the authority to conduct such program, then any 
funds in a parallel account established for the benefit of any 
individual under such program shall be deposited into the Individual 
Development Account of such individual as of the first day of such 
termination.

SEC. 509. REPORTING, MONITORING, AND EVALUATION.

    (a) Responsibilities of Qualified Financial Institutions.--
            (1) In general.--Each qualified financial institution that 
        operates a qualified individual development account program 
        under section 504 shall report annually to the Secretary within 
        90 days after the end of each calendar year on--
                    (A) the number of individuals making contributions 
                into Individual Development Accounts and the amounts 
                contributed,
                    (B) the amounts contributed into Individual 
                Development Accounts by eligible individuals and the 
                amounts deposited into parallel accounts for matching 
                funds,
                    (C) the amounts withdrawn from Individual 
                Development Accounts and parallel accounts, and the 
                purposes for which such amounts were withdrawn,
                    (D) the balances remaining in Individual 
                Development Accounts and parallel accounts, and
                    (E) such other information needed to help the 
                Secretary monitor the effectiveness of the qualified 
                individual development account program (provided in a 
                non-individually-identifiable manner).
            (2) Additional reporting requirements.--Each qualified 
        financial institution that operates a qualified individual 
        development account program under section 504 shall report at 
        such time and in such manner as the Secretary may prescribe any 
        additional information that the Secretary requires to be 
        provided for purposes of administering and supervising the 
        qualified individual development account program. This 
        additional data may include, without limitation, identifying 
        information about Individual Development Account owners, their 
        Accounts, additions to the Accounts, and withdrawals from the 
        Accounts.
    (b) Responsibilities of the Secretary.--
            (1) Monitoring protocol.--Not later than 12 months after 
        the date of the enactment of this Act, the Secretary, in 
        consultation with the Secretary of Health and Human Services, 
        shall develop and implement a protocol and process to monitor 
        the cost and outcomes of the qualified individual development 
        account programs established under section 504.
            (2) Annual reports.--For each year after 2003, the 
        Secretary shall submit a progress report to Congress on the 
        status of such qualified individual development account 
        programs. Such report shall, to the extent data are available, 
        include from a representative sample of qualified individual 
        development account programs information on--
                    (A) the characteristics of participants, including 
                age, gender, race or ethnicity, marital status, number 
                of children, employment status, and monthly income,
                    (B) deposits, withdrawals, balances, uses of 
                Individual Development Accounts, and participant 
                characteristics,
                    (C) the characteristics of qualified individual 
                development account programs, including match rate, 
                economic education requirements, permissible uses of 
                accounts, staffing of programs in full time employees, 
                and the total costs of programs, and
                    (D) process information on program implementation 
                and administration, especially on problems encountered 
                and how problems were solved.
            (3) Reauthorization report on cost and outcomes of idas.--
                    (A) In general.--Not later than July 1, 2008, the 
                Secretary of the Treasury shall submit a report to 
                Congress and the chairmen and ranking members of the 
                Committee on Finance, the Committee on Banking, 
                Housing, and Urban Affairs, and the Committee on 
                Health, Education, Labor, and Pensions of the Senate 
                and the Committee on Ways and Means, the Committee on 
                Banking and Financial Services, and the Committee on 
                Education and the Workforce of the House of 
                Representatives, in which the Secretary shall--
                            (i) summarize the previously submitted 
                        annual reports required under paragraph (2),
                            (ii) from a representative sample of 
                        qualified individual development account 
                        programs, include an analysis of--
                                    (I) the economic, social, and 
                                behavioral outcomes,
                                    (II) the changes in savings rates, 
                                asset holdings, and household debt, and 
                                overall changes in economic stability,
                                    (III) the changes in outlooks, 
                                attitudes, and behavior regarding 
                                savings strategies, investment, 
                                education, and family,
                                    (IV) the integration into the 
                                financial mainstream, including 
                                decreased reliance on alternative 
                                financial services, and increase in 
                                acquisition of mainstream financial 
                                products, and
                                    (V) the involvement in civic 
                                affairs, including neighborhood schools 
                                and associations,
                        associated with participation in qualified 
                        individual development account programs,
                            (iii) from a representative sample of 
                        qualified individual development account 
                        programs, include a comparison of outcomes 
                        associated with such programs with outcomes 
                        associated with other Federal Government social 
                        and economic development programs, including 
                        asset building programs, and
                            (iv) make recommendations regarding the 
                        reauthorization of the qualified individual 
                        development account programs, including--
                                    (I) recommendations regarding 
                                reforms that will improve the cost and 
                                outcomes of the such programs, 
                                including the ability to help low 
                                income families save and accumulate 
                                productive assets,
                                    (II) recommendations regarding the 
                                appropriate levels of subsidies to 
                                provide effective incentives to 
                                financial institutions and Account 
                                owners under such programs, and
                                    (III) recommendations regarding how 
                                such programs should be integrated into 
                                other Federal poverty reduction, asset 
                                building, and community development 
                                policies and programs.
                    (B) Authorization.--There is authorized to be 
                appropriated $2,500,000, for carrying out the purposes 
                of this paragraph.
            (4) Use of accounts in rural areas encouraged.--The 
        Secretary shall develop methods to encourage the use of 
        Individual Development Accounts in rural areas.

SEC. 510. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to the Secretary $1,000,000 
for fiscal year 2003 and for each fiscal year through 2010, for the 
purposes of implementing this title, including the reporting, 
monitoring, and evaluation required under section 509, to remain 
available until expended.

SEC. 511. MATCHING FUNDS FOR INDIVIDUAL DEVELOPMENT ACCOUNTS PROVIDED 
              THROUGH A TAX CREDIT FOR QUALIFIED FINANCIAL 
              INSTITUTIONS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by adding at the end the following new section:

``SEC. 45G. INDIVIDUAL DEVELOPMENT ACCOUNT INVESTMENT CREDIT.

    ``(a) Determination of Amount.--For purposes of section 38, the 
individual development account investment credit determined under this 
section with respect to any eligible entity for any taxable year is an 
amount equal to the individual development account investment provided 
by such eligible entity during the taxable year under an individual 
development account program established under section 504 of the 
Savings for Working Families Act of 2002.
    ``(b) Applicable Tax.--For the purposes of this section, the term 
`applicable tax' means the excess (if any) of--
            ``(1) the tax imposed under this chapter (other than the 
        taxes imposed under the provisions described in subparagraphs 
        (C) through (Q) of section 26(b)(2)), over
            ``(2) the credits allowable under subpart B (other than 
        this section) and subpart D of this part.
    ``(c) Individual Development Account Investment.--For purposes of 
this section, the term `individual development account investment' 
means, with respect to an individual development account program in any 
taxable year, an amount equal to the sum of--
            ``(1) the aggregate amount of dollar-for-dollar matches 
        under such program under section 506(b)(1)(A) of the Savings 
        for Working Families Act of 2002 for such taxable year, plus
            ``(2) $50 with respect to each Individual Development 
        Account maintained as of the end of such taxable year, with a 
        balance of not less than $100 (other than the taxable year in 
        which such Account is opened).
    ``(d) Eligible Entity.--For purposes of this section, except as 
provided in regulations, the term `eligible entity' means a qualified 
financial institution.
    ``(e) Other Definitions.--For purposes of this section, any term 
used in this section and also in the Savings for Working Families Act 
of 2002 shall have the meaning given such term by such Act.
    ``(f) Denial of Double Benefit.--
            ``(1) In general.--No deduction or credit (other than under 
        this section) shall be allowed under this chapter with respect 
        to any expense which--
                    ``(A) is taken into account under subsection 
                (c)(1)(A) in determining the credit under this section, 
                or
                    ``(B) is attributable to the maintenance of an 
                Individual Development Account.
            ``(2) Determination of amount.--Solely for purposes of 
        paragraph (1)(B), the amount attributable to the maintenance of 
        an Individual Development Account shall be deemed to be the 
        dollar amount of the credit allowed under subsection (c)(l)(B) 
        for each taxable year such Individual Development Account is 
        maintained.
    ``(g) Credit May Be Transferred.--
            ``(1) In general.--An eligible entity may transfer any 
        credit allowable to the eligible entity under subsection (a) to 
        any person other than to another eligible entity which is 
        exempt from tax under this title. The determination as to 
        whether a credit is allowable shall be made without regard to 
        the tax-exempt status of the eligible entity.
            ``(2) Consent required for revocation.--Any transfer under 
        paragraph (1) may be revoked only with the consent of the 
        Secretary.
    ``(h) Regulations.--The Secretary may prescribe such regulations as 
may be necessary or appropriate to carry out this section, including
            ``(1) such regulations as necessary to insure that any 
        credit described in subsection (g)(1) is claimed once and not 
        retransferred by a transferee, and
            ``(2) regulations providing for a recapture of the credit 
        allowed under this section (notwithstanding any termination 
        date described in subsection (i)) in cases where there is a 
        forfeiture under section 507(b) of the Savings for Working 
        Families Act of 2002 in a subsequent taxable year of any amount 
        which was taken into account in determining the amount of such 
        credit.
    ``(i) Application of Section.--
            ``(1) In general.--This section shall apply to any 
        expenditure made in any taxable year ending after December 31, 
        2003, and beginning on or before January 1, 2011, with respect 
        to any Individual Development Account which--
                    ``(A) is opened before January 1, 2011, and
                    ``(B) as determined by the Secretary, when added to 
                all of the previously opened Individual Development 
                Accounts, does not exceed--
                            ``(i) 100,000 Accounts if opened after 
                        December 31, 2003, and before January 1, 2007,
                            ``(ii) an additional 100,000 Accounts if 
                        opened after December 31, 2006, and before 
                        January 1, 2009, but only if, except as 
                        provided in paragraph (4), the total number of 
                        Accounts described in clause (i) are opened and 
                        the Secretary determines that such Accounts are 
                        being reasonably and responsibly administered, 
                        and
                            ``(iii) an additional 100,000 Accounts if 
                        opened after December 31, 2008, and before 
                        January 1, 2011, but only if the total number 
                        of Accounts described in clauses (i) and (ii) 
                        are opened and the Secretary makes a 
                        determination described in paragraph (2).
        Notwithstanding the preceding sentence, this section shall 
        apply to amounts which are described in subsection (c)(1)(A) 
        and which are timely deposited into a parallel account during 
        the 30-day period following the end of last taxable year 
        beginning before January 1, 2011.
            ``(2) Determination with respect to third group of 
        accounts.--A determination is described in this paragraph if 
        the Secretary determines that--
                    ``(A) substantially all of the previously opened 
                Accounts have been reasonably and responsibly 
                administered prior to the date of the determination,
                    ``(B) the individual development account programs 
                have increased net savings of participants in the 
                programs,
                    ``(C) participants in the individual development 
                account programs have increased Federal income tax 
                liability and decreased utilization of Federal 
                assistance programs relative to similarly situated 
                individuals that did not participate in the individual 
                development account programs, and
                    ``(D) the sum of the estimated increased Federal 
                tax liability and reduction of Federal assistance 
                program benefits to participants in the individual 
                development account programs is greater than the cost 
                of the individual development account programs to the 
                Federal government.
            ``(3) Determination of limitation.--The limitation on the 
        number of Individual Development Accounts under paragraph 
        (1)(B) shall be allocated by the Secretary among qualified 
        individual development account programs selected by the 
        Secretary and, in the case of the limitation under clause (iii) 
        of such paragraph, shall be equally divided among the States.
            ``(4) Special rule if smaller number of accounts are 
        opened.--For purposes of paragraph (1)(B)(ii)--
                            ``(i) In general.--If less than 100,000 
                        Accounts are opened before January 1, 2007, 
                        such paragraph shall be applied by substituting 
                        ``applicable number of Accounts' for `100,000 
                        Accounts'.
                            ``(ii) Applicable number.--For purposes of 
                        clause (i), the applicable number equals the 
                        lesser of--
                                    ``(I) 75,000, or
                                    ``(II) 3 times the number of 
                                Accounts opened before January 1, 
                                2007.''.
    (b) Credit Treated as Business Credit.--Section 38(b) of the 
Internal Revenue Code of 1986 (relating to current year business 
credit) is amended by striking ``plus'' at the end of paragraph (14), 
by striking the period at the end of paragraph (15) and inserting ``, 
plus'', and by adding at the end the following new paragraph:
            ``(16) the individual development account investment credit 
        determined under section 45G(a).''.
    (c) No Carrybacks.--Subsection (d) of section 39 of the Internal 
Revenue Code of 1986 (relating to carryback and carryforward of unused 
credits) is amended by adding at the end the following:
            ``(11) No carryback of section 45g credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the individual development 
        account investment credit determined under section 45G may be 
        carried back to a taxable year ending before January 1, 
        2004.''.
    (d) Conforming Amendment.--The table of sections for subpart C of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new item:

                              ``Sec. 45G. Individual development 
                                        account investment credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2003.

                      TITLE VI--REVENUE PROVISIONS

           Subtitle A--Tax Shelter Transparency Requirements

                  PART I--TAXPAYER-RELATED PROVISIONS

SEC. 601. PENALTY FOR FAILING TO DISCLOSE REPORTABLE TRANSACTION.

    (a) In General.--Part I of subchapter B of chapter 68 (relating to 
assessable penalties) is amended by inserting after section 6707 the 
following new section:

``SEC. 6707A. PENALTY FOR FAILURE TO INCLUDE REPORTABLE TRANSACTION 
              INFORMATION WITH RETURN OR STATEMENT.

    ``(a) Imposition of Penalty.--Any person who fails to include on 
any return or statement any information with respect to a reportable 
transaction which is required under section 6011 to be included with 
such return or statement shall pay a penalty in the amount determined 
under subsection (b).
    ``(b) Amount of Penalty.--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (3), the amount of the penalty under subsection (a) shall be 
        $50,000.
            ``(2) Listed transaction.--The amount of the penalty under 
        subsection (a) with respect to a listed transaction shall be 
        $100,000.
            ``(3) Increase in penalty for large entities and high net 
        worth individuals.--
                    ``(A) In general.--In the case of a failure under 
                subsection (a) by--
                            ``(i) a large entity, or
                            ``(ii) a high net worth individual,
                the penalty under paragraph (1) or (2) shall be twice 
                the amount determined without regard to this paragraph.
                    ``(B) Large entity.--For purposes of subparagraph 
                (A), the term `large entity' means, with respect to any 
                taxable year, a person (other than a natural person) 
                with gross receipts in excess of $10,000,000 for the 
                taxable year in which the reportable transaction occurs 
                or the preceding taxable year. Rules similar to the 
                rules of paragraph (2) and subparagraphs (B), (C), and 
                (D) of paragraph (3) of section 448(c) shall apply for 
                purposes of this subparagraph.
                    ``(C) High net worth individual.--The term `high 
                net worth individual' means, with respect to a 
                reportable transaction, a natural person whose net 
                worth exceeds $2,000,000 immediately before the 
                transaction.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Reportable transaction.--The term `reportable 
        transaction' means any transaction with respect to which 
        information is required to be included with a return or 
        statement because, as determined under regulations prescribed 
        under section 6011, such transaction is of a type which the 
        Secretary determines as having a potential for tax avoidance or 
        evasion.
            ``(2) Listed transaction.--Except as provided in 
        regulations, the term `listed transaction' means a reportable 
        transaction which is the same as, or similar to, a transaction 
        specifically identified by the Secretary as a tax avoidance 
        transaction for purposes of section 6011.
    ``(d) Authority to Rescind Penalty.--
            ``(1) In general.--The Commissioner of Internal Revenue may 
        rescind all or any portion of any penalty imposed by this 
        section with respect to any violation if--
                    ``(A) the violation is with respect to a reportable 
                transaction other than a listed transaction,
                    ``(B) the person on whom the penalty is imposed has 
                a history of complying with the requirements of this 
                title,
                    ``(C) it is shown that the violation is due to an 
                unintentional mistake of fact;
                    ``(D) imposing the penalty would be against equity 
                and good conscience, and
                    ``(E) rescinding the penalty would promote 
                compliance with the requirements of this title and 
                effective tax administration.
            ``(2) Discretion.--The exercise of authority under 
        paragraph (1) shall be at the sole discretion of the 
        Commissioner and may be delegated only to the head of the 
        Office of Tax Shelter Analysis. The Commissioner, in his sole 
        discretion, may establish a procedure to determine if a penalty 
        should be referred to the Commissioner or the head of such 
        Office for a determination under paragraph (1).
            ``(3) No appeal.--Notwithstanding any other provision of 
        law, any determination under this subsection may not be 
        reviewed in any administrative or judicial proceeding.
            ``(4) Records.--If a penalty is rescinded under paragraph 
        (1), the Commissioner shall place in the file in the Office of 
        the Commissioner the opinion of the Commissioner or the head of 
        the Office of Tax Shelter Analysis with respect to the 
        determination, including--
                    ``(A) the reasons for the rescission, and
                    ``(B) the amount of the penalty rescinded.
            ``(5) Report.--The Commissioner shall each year report to 
        the Committee on Ways and Means of the House of Representatives 
        and the Committee on Finance of the Senate--
                    ``(A) a summary of the total number and aggregate 
                amount of penalties imposed, and rescinded, under this 
                section, and
                    ``(B) a description of each penalty rescinded under 
                this subsection and the reasons therefor.
    ``(e) Penalty Reported to SEC.--In the case of a person--
            ``(1) which is required to file periodic reports under 
        section 13 or 15(d) of the Securities Exchange Act of 1934 or 
        is required to be consolidated with another person for purposes 
        of such reports, and
            ``(2) which--
                    ``(A) is required to pay a penalty under this 
                section with respect to a listed transaction, or
                    ``(B) is required to pay a penalty under section 
                6662A with respect to any reportable transaction at a 
                rate prescribed under section 6662A(c),
the requirement to pay such penalty shall be disclosed in such reports 
filed by such person for such periods as the Secretary shall specify. 
Failure to make a disclosure in accordance with the preceding sentence 
shall be treated as a failure to which the penalty under subsection 
(b)(2) applies.
    ``(f) Coordination With Other Penalties.--The penalty imposed by 
this section is in addition to any penalty imposed under section 
6662.''
    (b) Conforming Amendment.--The table of sections for part I of 
subchapter B of chapter 68 is amended by inserting after the item 
relating to section 6707 the following:

                              ``Sec. 6707A. Penalty for failure to 
                                        include reportable transaction 
                                        information with return or 
                                        statement.''
    (c) Effective Date.--The amendments made by this section shall 
apply to returns and statements the due date for which is after the 
date of the enactment of this Act.

SEC. 602. ACCURACY-RELATED PENALTY FOR LISTED TRANSACTIONS AND OTHER 
              REPORTABLE TRANSACTIONS HAVING A SIGNIFICANT TAX 
              AVOIDANCE PURPOSE.

    (a) In General.--Subchapter A of chapter 68 is amended by inserting 
after section 6662 the following new section:

``SEC. 6662A. IMPOSITION OF ACCURACY-RELATED PENALTY ON UNDERSTATEMENTS 
              WITH RESPECT TO REPORTABLE TRANSACTIONS.

    ``(a) Imposition of Penalty.--If a taxpayer has a reportable 
transaction understatement for any taxable year, there shall be added 
to the tax an amount equal to 20 percent of the amount of such 
understatement.
    ``(b) Reportable Transaction Understatement.--For purposes of this 
section--
            ``(1) In general.--The term `reportable transaction 
        understatement' means the sum of--
                    ``(A) the product of--
                            ``(i) the amount of the increase (if any) 
                        in taxable income which results from a 
                        difference between the proper tax treatment of 
                        an item to which this section applies and the 
                        taxpayer's treatment of such item (as shown on 
                        the taxpayer's return of tax), and
                            ``(ii) the highest rate of tax imposed by 
                        section 1 (section 11 in the case of a taxpayer 
                        which is a corporation), and
                    ``(B) the amount of the decrease (if any) in the 
                aggregate amount of credits determined under subtitle A 
                which results from a difference between the taxpayer's 
                treatment of an item to which this section applies (as 
                shown on the taxpayer's return of tax) and the proper 
                tax treatment of such item.
        For purposes of subparagraph (A), any reduction of the excess 
        of deductions allowed for the taxable year over gross income 
        for such year, and any reduction in the amount of capital 
        losses which would (without regard to section 1211) be allowed 
        for such year, shall be treated as an increase in taxable 
        income.
            ``(2) Items to which section applies.--This section shall 
        apply to any item which is attributable to--
                    ``(A) any listed transaction, and
                    ``(B) any reportable transaction (other than a 
                listed transaction) if a significant purpose of such 
                transaction is the avoidance or evasion of Federal 
                income tax.
    ``(c) Higher Penalties for Nondisclosed Listed and Other Avoidance 
Transactions.--If the requirement of section 6664(d)(2)(A) is not met 
with respect to any portion of any reportable transaction 
understatement, then subsection (a) shall be applied by substituting--
            ``(1) `30 percent' for `20 percent' if such understatement 
        is attributable to a listed transaction, and
            ``(2) `25 percent' for `20 percent' in the case of any 
        other understatement.
    ``(d) Definitions of Reportable and Listed Transactions.--For 
purposes of this section, the terms `reportable transaction' and 
`listed transaction' have the respective meanings given to such terms 
by section 6707A(c).
    ``(e) Special rules.--
            ``(1) Coordination with penalties, etc., on other 
        understatements.--In the case of an understatement (as defined 
        in section 6662(d)(2))--
                    ``(A) the amount of such understatement (determined 
                without regard to this paragraph) shall be increased by 
                the aggregate amount of reportable transaction 
                understatements for purposes of determining whether 
                such understatement is a substantial understatement 
                under section 6662(d)(1), but
                    ``(B) the addition to tax under section 6662(a) 
                shall apply only to the excess of the amount of the 
                substantial understatement (if any) after the 
                application of subparagraph (A) over the aggregate 
                amount of reportable transaction understatements.
            ``(2) Coordination with fraud penalty.--
                    ``(A) In general.--References to an underpayment in 
                section 6663 shall be treated as including references 
                to a reportable transaction understatement.
                    ``(B) No double penalty.--This section shall not 
                apply to any portion of an understatement on which a 
                penalty is imposed under section 6663.
            ``(3) Special rule for amended returns.--Except as provided 
        in regulations, in no event shall any tax treatment included 
        with an amendment or supplement to a return of tax be taken 
        into account in determining the amount of any reportable 
        transaction understatement if the amendment or supplement is 
        filed after the earlier of the date the taxpayer is first 
        contacted by the Secretary regarding the examination of the 
        return or such other date as is specified by the Secretary.''
    (b) Determination of Other Understatements.--Subparagraph (A) of 
section 6662(d)(2) is amended by adding at the end the following flush 
sentence:
                ``The excess under the preceding sentence shall be 
                determined without regard to items to which section 
                6662A applies.''
    (c) Reasonable Cause Exception.--
            (1) In general.--Section 6664 is amended by adding at the 
        end the following new subsection:
    ``(d) Reasonable Cause Exception for Reportable Transaction 
Understatements.--
            ``(1) In general.--No penalty shall be imposed under 
        section 6662A with respect to any portion of a reportable 
        transaction understatement if it is shown that there was a 
        reasonable cause for such portion and that the taxpayer acted 
        in good faith with respect to such portion.
            ``(2) Special rules.--Paragraph (1) shall not apply to any 
        reportable transaction understatement unless--
                    ``(A) the relevant facts affecting the tax 
                treatment of the item are adequately disclosed in 
                accordance with the regulations prescribed under 
                section 6011,
                    ``(B) there is or was substantial authority for 
                such treatment, and
                    ``(C) the taxpayer reasonably believed that such 
                treatment was more likely than not the proper 
                treatment.
        A taxpayer failing to adequately disclose in accordance with 
        section 6011 shall be treated as meeting the requirements of 
        subparagraph (A) if the penalty for such failure was rescinded 
        under section 6707A(d).
            ``(3) Rules relating to reasonable belief.--For purposes of 
        paragraph (2)(C)--
                    ``(A) In general.--A taxpayer shall be treated as 
                having a reasonable belief with respect to the tax 
                treatment of an item only if such belief--
                            ``(i) is based on the facts and law that 
                        exist at the time the return of tax which 
                        includes such tax treatment is filed, and
                            ``(ii) relates solely to the taxpayer's 
                        chances of success on the merits of such 
                        treatment and does not take into account the 
                        possibility that a return will not be audited, 
                        such treatment will not be raised on audit, or 
                        such treatment will be resolved through 
                        settlement if it is raised.
                    ``(B) Certain opinions may not be relied upon.--
                            ``(i) In general.--An opinion of a tax 
                        advisor may not be relied upon to establish the 
                        reasonable belief of a taxpayer if--
                                    ``(I) the tax advisor is described 
                                in clause (ii), or
                                    ``(II) the opinion is described in 
                                clause (iii).
                            ``(ii) Disqualified tax advisors.--A tax 
                        advisor is described in this clause if the tax 
                        advisor is a material advisor (within the 
                        meaning of section 6111(b)(1)) who--
                                    ``(I) participates in the 
                                organization, management, promotion, or 
                                sale of the transaction or is related 
                                (within the meaning of section 267 or 
                                707) to any person who so participates,
                                    ``(II) is compensated by another 
                                material advisor with respect to the 
                                transaction,
                                    ``(III) has a fee arrangement with 
                                respect to the transaction which is 
                                contingent on all or part of the 
                                intended tax benefits from the 
                                transaction being sustained, or
                                    ``(IV) as determined under 
                                regulations prescribed by the 
                                Secretary, has a continuing financial 
                                interest with respect to the 
                                transaction.
                            ``(iii) Disqualified opinions.--For 
                        purposes of clause (i), an opinion is 
                        disqualified if the opinion--
                                    ``(I) is based on unreasonable 
                                factual or legal assumptions (including 
                                assumptions as to future events),
                                    ``(II) unreasonably relies on 
                                representations, statements, findings, 
                                or agreements of the taxpayer or any 
                                other person,
                                    ``(III) does not identify and 
                                consider all relevant facts, or
                                    ``(IV) fails to meet any other 
                                requirement as the Secretary may 
                                prescribe.''
            (2) Conforming amendment.--The heading for subsection (c) 
        of section 6664 is amended by inserting ``for Underpayments'' 
        after ``Exception''.
    (d) Conforming Amendments.--
            (1) Subparagraph (C) of section 461(i)(3) is amended by 
        striking ``section 6662(d)(2)(C)(iii)'' and inserting ``section 
        1274(b)(3)(C)''.
            (2) Paragraph (3) of section 1274(b) is amended--
                    (A) by striking ``(as defined in section 
                6662(d)(2)(C)(iii))'' in subparagraph (B)(i), and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(C) Tax shelter.--For purposes of subparagraph 
                (B), the term `tax shelter' means--
                            ``(i) a partnership or other entity,
                            ``(ii) any investment plan or arrangement, 
                        or
                            ``(iii) any other plan or arrangement,
                if a significant purpose of such partnership, entity, 
                plan, or arrangement is the avoidance or evasion of 
                Federal income tax.''
            (3) Section 6662(d)(2) is amended by striking subparagraphs 
        (C) and (D).
            (4) Section 6664(c)(1) is amended by striking ``part'' and 
        inserting ``section 6662 or 6663''.
            (5) Subsection (b) of section 7525 is amended by striking 
        ``section 6662(d)(2)(C)(iii)'' and inserting ``section 
        1274(b)(3)(C)''.
            (6)(A) The heading for section 6662 is amended to read as 
        follows:

``SEC. 6662. IMPOSITION OF ACCURACY-RELATED PENALTY ON UNDERPAYMENTS.''

            (B) The table of sections for part II of subchapter A of 
        chapter 68 is amended by striking the item relating to section 
        6662 and inserting the following new items:

                              ``Sec. 6662. Imposition of accuracy-
                                        related penalty on 
                                        underpayments.
                              ``Sec. 6662A. Imposition of accuracy-
                                        related penalty on 
                                        understatements with respect to 
                                        reportable transactions.''
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.

SEC. 603. MODIFICATIONS OF SUBSTANTIAL UNDERSTATEMENT PENALTY FOR 
              NONREPORTABLE TRANSACTIONS.

    (a) Substantial Understatement of Corporations.--Section 
6662(d)(1)(B) (relating to special rule for corporations) is amended to 
read as follows:
                    ``(B) Special rule for corporations.--In the case 
                of a corporation other than an S corporation or a 
                personal holding company (as defined in section 542), 
                there is a substantial understatement of income tax for 
                any taxable year if the amount of the understatement 
                for the taxable year exceeds the lesser of--
                            ``(i) 10 percent of the tax required to be 
                        shown on the return for the taxable year (or, 
                        if greater, $10,000), or
                            ``(ii) $10,000,000.''
    (b) Reduction for Understatement of Taxpayer Due to Position of 
Taxpayer or Disclosed Item.--
            (1) In general.--Section 6662(d)(2)(B)(i) (relating to 
        substantial authority) is amended to read as follows:
                            ``(i) the tax treatment of any item by the 
                        taxpayer if the taxpayer had reasonable belief 
                        that the tax treatment was more likely than not 
                        the proper treatment, or''.
            (2) Conforming amendment.--Section 6662(d) is amended by 
        adding at the end the following new paragraph:
            ``(3) Secretarial list.--For purposes of this subsection, 
        section 6664(d)(2), and section 6694(a)(1), the Secretary may 
        prescribe a list of positions for which the Secretary believes 
        there is not substantial authority or there is no reasonable 
        belief that the tax treatment is more likely than not the 
        proper tax treatment. Such list (and any revisions thereof) 
        shall be published in the Federal Register or the Internal 
        Revenue Bulletin.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 604. TAX SHELTER EXCEPTION TO CONFIDENTIALITY PRIVILEGES RELATING 
              TO TAXPAYER COMMUNICATIONS.

    (a) In General.--Section 7525(b) (relating to section not to apply 
to communications regarding corporate tax shelters) is amended to read 
as follows:
    ``(b) Section Not To Apply to Communications Regarding Tax 
Shelters.--The privilege under subsection (a) shall not apply to any 
written communication which is--
            ``(1) between a federally authorized tax practitioner and--
                    ``(A) any person,
                    ``(B) any director, officer, employee, agent, or 
                representative of the person, or
                    ``(C) any other person holding a capital or profits 
                interest in the person, and
            ``(2) in connection with the promotion of the direct or 
        indirect participation of the person in any tax shelter (as 
        defined in section 1274(b)(3)(C)).''
    (b) Effective Date.--The amendment made by this section shall apply 
to communications made on or after the date of the enactment of this 
Act.

           PART II--PROMOTER AND PREPARER RELATED PROVISIONS

       Subpart A--Provisions Relating to Reportable Transactions

SEC. 611. DISCLOSURE OF REPORTABLE TRANSACTIONS.

    (a) In General.--Section 6111 (relating to registration of tax 
shelters) is amended to read as follows:

``SEC. 6111. DISCLOSURE OF REPORTABLE TRANSACTIONS.

    ``(a) In General.--Each material advisor with respect to any 
reportable transaction shall make a return (in such form as the 
Secretary may prescribe) setting forth--
            ``(1) information identifying and describing the 
        transaction,
            ``(2) information describing any potential tax benefits 
        expected to result from the transaction, and
            ``(3) such other information as the Secretary may 
        prescribe.
Such return shall be filed not later than the date specified by the 
Secretary.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Material advisor.--
                    ``(A) In general.--The term `material advisor' 
                means any person--
                            ``(i) who provides any material aid, 
                        assistance, or advice with respect to 
                        organizing, promoting, selling, implementing, 
                        or carrying out any reportable transaction, and
                            ``(ii) who directly or indirectly derives 
                        gross income in excess of the threshold amount 
                        for such advice or assistance.
                    ``(B) Threshold amount.--For purposes of 
                subparagraph (A), the threshold amount is--
                            ``(i) $50,000 in the case of a reportable 
                        transaction substantially all of the tax 
                        benefits from which are provided to natural 
                        persons, and
                            ``(ii) $250,000 in any other case.
            ``(2) Reportable transaction.--The term `reportable 
        transaction' has the meaning given to such term by section 
        6707A(c).
    ``(c) Regulations.--The Secretary may prescribe regulations which 
provide--
            ``(1) that only 1 person shall be required to meet the 
        requirements of subsection (a) in cases in which 2 or more 
        persons would otherwise be required to meet such requirements,
            ``(2) exemptions from the requirements of this section, and
            ``(3) such rules as may be necessary or appropriate to 
        carry out the purposes of this section.''
    (b) Conforming Amendments.--
            (1) The item relating to section 6111 in the table of 
        sections for subchapter B of chapter 61 is amended to read as 
        follows:

                              ``Sec. 6111. Disclosure of reportable 
                                        transactions.''
            (2)(A) So much of section 6112 as precedes subsection (c) 
        thereof is amended to read as follows:

``SEC. 6112. MATERIAL ADVISORS OF REPORTABLE TRANSACTIONS MUST KEEP 
              LISTS OF ADVISEES.

    ``(a) In General.--Each material advisor (as defined in section 
6111) with respect to any reportable transaction (as defined in section 
6707A(c)) shall maintain, in such manner as the Secretary may by 
regulations prescribe, a list--
            ``(1) identifying each person with respect to whom such 
        advisor acted as such a material advisor with respect to such 
        transaction, and
            ``(2) containing such other information as the Secretary 
        may by regulations require.
This section shall apply without regard to whether a material advisor 
is required to file a return under section 6111 with regard to such 
transaction.''
            (B) Section 6112 is amended by redesignating subsection (c) 
        as subsection (b).
            (C) Section 6112(b), as redesignated by subparagraph (B), 
        is amended--
                    (i) by inserting ``written'' before ``request'' in 
                paragraph (1)(A), and
                    (ii) by striking ``shall prescribe'' in paragraph 
                (2) and inserting ``may prescribe''.
            (D) The item relating to section 6112 in the table of 
        sections for subchapter B of chapter 61 is amended to read as 
        follows:

                              ``Sec. 6112. Material advisors of 
                                        reportable transactions must 
                                        keep lists of advisees.''
            (3)(A) The heading for section 6708 is amended to read as 
        follows:

``SEC. 6708. FAILURE TO MAINTAIN LISTS OF ADVISEES WITH RESPECT TO 
              REPORTABLE TRANSACTIONS.''

            (B) The item relating to section 6708 in the table of 
        sections for part I of subchapter B of chapter 68 is amended to 
        read as follows:

                              ``Sec. 6708. Failure to maintain lists of 
                                        advisees with respect to 
                                        reportable transactions.''
    (c) Effective Date.--The amendments made by this section shall 
apply to transactions with respect to which material aid, assistance, 
or advice referred to in section 6111(b)(1)(A)(i) of the Internal 
Revenue Code of 1986 (as added by this section) is provided after the 
date of the enactment of this Act.

SEC. 612. MODIFICATIONS TO PENALTY FOR FAILURE TO REGISTER TAX 
              SHELTERS.

    (a) In General.--Section 6707 (relating to failure to furnish 
information regarding tax shelters) is amended to read as follows:

``SEC. 6707. FAILURE TO FURNISH INFORMATION REGARDING REPORTABLE 
              TRANSACTIONS.

    ``(a) In General.--If a person who is required to file a return 
under section 6111(a) with respect to any reportable transaction--
            ``(1) fails to file such return on or before the date 
        prescribed therefor, or
            ``(2) files false or incomplete information with the 
        Secretary with respect to such transaction,
such person shall pay a penalty with respect to such return in the 
amount determined under subsection (b).
    ``(b) Amount of Penalty.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        penalty imposed under subsection (a) with respect to any 
        failure shall be $50,000.
            ``(2) Listed transactions.--The penalty imposed under 
        subsection (a) with respect to any listed transaction shall be 
        an amount equal to the greater of--
                    ``(A) $200,000, or
                    ``(B) 50 percent of the gross income derived by 
                such person with respect to aid, assistance, or advice 
                which is provided with respect to the reportable 
                transaction before the date the return including the 
                transaction is filed under section 6111.
        Subparagraph (B) shall be applied by substituting `75 percent' 
        for `50 percent' in the case of an intentional failure or act 
        described in subsection (a).
    ``(c) Reportable and Listed Transactions.--The terms `reportable 
transaction' and `listed transaction' have the respective meanings 
given to such terms by section 6707A(c).
    ``(d) Rescission Authority.--The provisions of section 6707A(d) 
(relating to authority of Commissioner to rescind penalty) shall apply 
to any penalty imposed under this section.''
    (b) Clerical Amendment.--The item relating to section 6707 in the 
table of sections for part I of subchapter B of chapter 68 is amended 
by striking ``tax shelters'' and inserting ``reportable transactions''.
    (c) Effective Date.--The amendments made by this section shall 
apply to returns the due date for which is after the date of the 
enactment of this Act.

SEC. 613. MODIFICATION OF PENALTY FOR FAILURE TO MAINTAIN LISTS OF 
              INVESTORS.

    (a) In General.--Subsection (a) of section 6708 is amended to read 
as follows:
    ``(a) Imposition of Penalty.--
            ``(1) In general.--If any person who is required to 
        maintain a list under section 6112(a) fails to make such list 
        available to the Secretary in accordance with section 
        6112(b)(1)(A) within 20 business days after the date of the 
        Secretary's request, such person shall pay a penalty of $10,000 
        for each day of such failure after such 20th day.
            ``(2) Reasonable cause exception.--No penalty shall be 
        imposed by paragraph (1) with respect to the failure on any day 
        if such failure is due to reasonable cause.''
    (b) Effective Date.--The amendment made by this section shall apply 
to requests made after the date of the enactment of this Act.

SEC. 614. MODIFICATION OF ACTIONS TO ENJOIN CERTAIN CONDUCT RELATED TO 
              TAX SHELTERS AND REPORTABLE TRANSACTIONS.

    (a) In General.--Section 7408 (relating to action to enjoin 
promoters of abusive tax shelters, etc.) is amended by redesignating 
subsection (c) as subsection (d) and by striking subsections (a) and 
(b) and inserting the following new subsections:
    ``(a) Authority To Seek Injunction.--A civil action in the name of 
the United States to enjoin any person from further engaging in 
specified conduct may be commenced at the request of the Secretary. Any 
action under this section shall be brought in the district court of the 
United States for the district in which such person resides, has his 
principal place of business, or has engaged in specified conduct. The 
court may exercise its jurisdiction over such action (as provided in 
section 7402(a)) separate and apart from any other action brought by 
the United States against such person.
    ``(b) Adjudication and Decree.--In any action under subsection (a), 
if the court finds--
            ``(1) that the person has engaged in any specified conduct, 
        and
            ``(2) that injunctive relief is appropriate to prevent 
        recurrence of such conduct,
the court may enjoin such person from engaging in such conduct or in 
any other activity subject to penalty under this title.
    ``(c) Specified Conduct.--For purposes of this section, the term 
`specified conduct' means any action, or failure to take action, 
subject to penalty under section 6700, 6701, 6707, or 6708.''
    (b) Conforming Amendments.--
            (1) The heading for section 7408 is amended to read as 
        follows:

``SEC. 7408. ACTIONS TO ENJOIN SPECIFIED CONDUCT RELATED TO TAX 
              SHELTERS AND REPORTABLE TRANSACTIONS.''

            (2) The table of sections for subchapter A of chapter 67 is 
        amended by striking the item relating to section 7408 and 
        inserting the following new item:

        ``Sec. 7408. Actions to enjoin specified conduct related to tax 
                            shelters and reportable transactions.''
    (c) Effective Date.--The amendment made by this section shall take 
effect on the day after the date of the enactment of this Act.

           Subpart B--Other Promoter and Preparer Provisions

SEC. 621. UNDERSTATEMENT OF TAXPAYER'S LIABILITY BY INCOME TAX RETURN 
              PREPARER.

    (a) Standards Conformed to Taxpayer Standards.--Section 6694(a) 
(relating to understatements due to unrealistic positions) is amended--
            (1) by striking ``realistic possibility of being sustained 
        on its merits'' in paragraph (1) and inserting ``reasonable 
        belief that the tax treatment in such position was more likely 
        than not the proper treatment'',
            (2) by striking ``or was frivolous'' in paragraph (3) and 
        inserting ``or there was no reasonable basis for the tax 
        treatment of such position'', and
            (3) by striking ``Unrealistic'' in the heading and 
        inserting ``Improper''.
    (b) Amount of Penalty.--Section 6694 is amended--
            (1) by striking ``$250'' in subsection (a) and inserting 
        ``$1,000'', and
            (2) by striking ``$1,000'' in subsection (b) and inserting 
        ``$5,000''.
    (c) Effective Date.--The amendments made by this section shall 
apply to documents prepared after the date of the enactment of this 
Act.

SEC. 622. PENALTY ON FAILURE TO REPORT INTERESTS IN FOREIGN FINANCIAL 
              ACCOUNTS.

    (a) In General.--Section 5321(a)(5) of title 31, United States 
Code, is amended to read as follows:
            ``(5) Foreign financial agency transaction violation.--
                    ``(A) Penalty authorized.--The Secretary of the 
                Treasury may impose a civil money penalty on any person 
                who violates, or causes any violation of, any provision 
                of section 5314.
                    ``(B) Amount of penalty.--
                            ``(i) In general.--Except as provided in 
                        subparagraph (C), the amount of any civil 
                        penalty imposed under subparagraph (A) shall 
                        not exceed $5,000.
                            ``(ii) Reasonable cause exception.--No 
                        penalty shall be imposed under subparagraph (A) 
                        with respect to any violation if--
                                    ``(I) such violation was due to 
                                reasonable cause, and
                                    ``(II) the amount of the 
                                transaction or the balance in the 
                                account at the time of the transaction 
                                was properly reported.
                    ``(C) Willful violations.--In the case of any 
                person willfully violating, or willfully causing any 
                violation of, any provision of section 5314--
                            ``(i) the maximum penalty under 
                        subparagraph (B)(i) shall be increased to the 
                        greater of--
                                    ``(I) $25,000, or
                                    ``(II) the amount (not exceeding 
                                $100,000) determined under subparagraph 
                                (D), and
                            ``(ii) subparagraph (B)(ii) shall not 
                        apply.
                    ``(D) Amount.--The amount determined under this 
                subparagraph is--
                            ``(i) in the case of a violation involving 
                        a transaction, the amount of the transaction, 
                        or
                            ``(ii) in the case of a violation involving 
                        a failure to report the existence of an account 
                        or any identifying information required to be 
                        provided with respect to an account, the 
                        balance in the account at the time of the 
                        violation.''
    (b) Effective Date.--The amendment made by this section shall apply 
to violations occurring after the date of the enactment of this Act.

SEC. 623. FRIVOLOUS TAX SUBMISSIONS.

    (a) Civil Penalties.--Section 6702 is amended to read as follows:

``SEC. 6702. FRIVOLOUS TAX SUBMISSIONS.

    ``(a) Civil Penalty for Frivolous Tax Returns.--A person shall pay 
a penalty of $5,000 if--
            ``(1) such person files what purports to be a return of a 
        tax imposed by this title but which--
                    ``(A) does not contain information on which the 
                substantial correctness of the self-assessment may be 
                judged, or
                    ``(B) contains information that on its face 
                indicates that the self-assessment is substantially 
                incorrect; and
            ``(2) the conduct referred to in paragraph (1)--
                    ``(A) is based on a position which the Secretary 
                has identified as frivolous under subsection (c), or
                    ``(B) reflects a desire to delay or impede the 
                administration of Federal tax laws.
    ``(b) Civil Penalty for Specified Frivolous Submissions.--
            ``(1) Imposition of penalty.--Except as provided in 
        paragraph (3), any person who submits a specified frivolous 
        submission shall pay a penalty of $5,000.
            ``(2) Specified frivolous submission.--For purposes of this 
        section--
                    ``(A) Specified frivolous submission.--The term 
                `specified frivolous submission' means a specified 
                submission if any portion of such submission--
                            ``(i) is based on a position which the 
                        Secretary has identified as frivolous under 
                        subsection (c), or
                            ``(ii) reflects a desire to delay or impede 
                        the administration of Federal tax laws.
                    ``(B) Specified submission.--The term `specified 
                submission' means--
                            ``(i) a request for a hearing under--
                                    ``(I) section 6320 (relating to 
                                notice and opportunity for hearing upon 
                                filing of notice of lien), or
                                    ``(II) section 6330 (relating to 
                                notice and opportunity for hearing 
                                before levy), and
                            ``(ii) an application under--
                                    ``(I) section 6159 (relating to 
                                agreements for payment of tax liability 
                                in installments),
                                    ``(II) section 7122 (relating to 
                                compromises), or
                                    ``(III) section 7811 (relating to 
                                taxpayer assistance orders).
            ``(3) Opportunity to withdraw submission.--If the Secretary 
        provides a person with notice that a submission is a specified 
        frivolous submission and such person withdraws such submission 
        within 30 days after such notice, the penalty imposed under 
        paragraph (1) shall not apply with respect to such submission.
    ``(c) Listing of Frivolous Positions.--The Secretary shall 
prescribe (and periodically revise) a list of positions which the 
Secretary has identified as being frivolous for purposes of this 
subsection. The Secretary shall not include in such list any position 
that the Secretary determines meets the requirement of section 
6662(d)(2)(B)(ii)(II).
    ``(d) Reduction of Penalty.--The Secretary may reduce the amount of 
any penalty imposed under this section if the Secretary determines that 
such reduction would promote compliance with and administration of the 
Federal tax laws.
    ``(e) Penalties in Addition to Other Penalties.--The penalties 
imposed by this section shall be in addition to any other penalty 
provided by law.''
    (b) Treatment of Frivolous Requests for Hearings Before Levy.--
            (1) Frivolous requests disregarded.--Section 6330 (relating 
        to notice and opportunity for hearing before levy) is amended 
        by adding at the end the following new subsection:
    ``(g) Frivolous Requests for Hearing, Etc.--Notwithstanding any 
other provision of this section, if the Secretary determines that any 
portion of a request for a hearing under this section or section 6320 
meets the requirement of clause (i) or (ii) of section 6702(b)(2)(A), 
then the Secretary may treat such portion as if it were never submitted 
and such portion shall not be subject to any further administrative or 
judicial review.''
            (2) Preclusion from raising frivolous issues at hearing.--
        Section 6330(c)(4) is amended--
                    (A) by striking ``(A)'' and inserting ``(A)(i)'';
                    (B) by striking ``(B)'' and inserting ``(ii)'';
                    (C) by striking the period at the end of the first 
                sentence and inserting ``; or''; and
                    (D) by inserting after subparagraph (A)(ii) (as so 
                redesignated) the following:
                    ``(B) the issue meets the requirement of clause (i) 
                or (ii) of section 6702(b)(2)(A).''
            (3) Statement of grounds.--Section 6330(b)(1) is amended by 
        striking ``under subsection (a)(3)(B)'' and inserting ``in 
        writing under subsection (a)(3)(B) and states the grounds for 
        the requested hearing''.
    (c) Treatment of Frivolous Requests for Hearings Upon Filing of 
Notice of Lien.--Section 6320 is amended--
            (1) in subsection (b)(1), by striking ``under subsection 
        (a)(3)(B)'' and inserting ``in writing under subsection 
        (a)(3)(B) and states the grounds for the requested hearing'', 
        and
            (2) in subsection (c), by striking ``and (e)'' and 
        inserting ``(e), and (g)''.
    (d) Treatment of Frivolous Applications for Offers-in-Compromise 
and Installment Agreements.--Section 7122 is amended by adding at the 
end the following new subsection:
    ``(e) Frivolous Submissions, Etc.--Notwithstanding any other 
provision of this section, if the Secretary determines that any portion 
of an application for an offer-in-compromise or installment agreement 
submitted under this section or section 6159 meets the requirement of 
clause (i) or (ii) of section 6702(b)(2)(A), then the Secretary may 
treat such portion as if it were never submitted and such portion shall 
not be subject to any further administrative or judicial review.''
    (e) Clerical Amendment.--The table of sections for part I of 
subchapter B of chapter 68 is amended by striking the item relating to 
section 6702 and inserting the following new item:

                              ``Sec. 6702. Frivolous tax submissions.''
    (f) Effective Date.--The amendments made by this section shall 
apply to submissions made and issues raised after the date on which the 
Secretary first prescribes a list under section 6702(c) of the Internal 
Revenue Code of 1986, as amended by subsection (a).

SEC. 624. REGULATION OF INDIVIDUALS PRACTICING BEFORE THE DEPARTMENT OF 
              TREASURY.

    (a) Censure; Imposition of Penalty.--
            (1) In general.--Section 330(b) of title 31, United States 
        Code, is amended--
                    (A) by inserting ``, or censure,'' after 
                ``Department'', and
                    (B) by adding at the end the following new flush 
                sentence:
``The Secretary may impose a monetary penalty on any representative 
described in the preceding sentence. If the representative was acting 
on behalf of an employer or any firm or other entity in connection with 
the conduct giving rise to such penalty, the Secretary may impose a 
monetary penalty on such employer, firm, or entity if it knew, or 
reasonably should have known, of such conduct. Such penalty shall not 
exceed the gross income derived (or to be derived) from the conduct 
giving rise to the penalty and may be in addition to, or in lieu of, 
any suspension, disbarment, or censure.''
            (2) Effective date.--The amendments made by this subsection 
        shall apply to actions taken after the date of the enactment of 
        this Act.
    (b) Tax Shelter Opinions, Etc.--Section 330 of such title 31 is 
amended by adding at the end the following new subsection:
    ``(d) Nothing in this section or in any other provision of law 
shall be construed to limit the authority of the Secretary of the 
Treasury to impose standards applicable to the rendering of written 
advice with respect to any entity, transaction plan or arrangement, or 
other plan or arrangement, which is of a type which the Secretary 
determines as having a potential for tax avoidance or evasion.''

SEC. 625. PENALTY ON PROMOTERS OF TAX SHELTERS.

    (a) Penalty on Promoting Abusive Tax Shelters.--Section 6700(a) is 
amended by adding at the end the following new sentence: 
``Notwithstanding the first sentence, if an activity with respect to 
which a penalty imposed under this subsection involves a statement 
described in paragraph (2)(A), the amount of the penalty shall be equal 
to 50 percent of the gross income derived (or to be derived) from such 
activity by the person on which the penalty is imposed.''
    (b) Effective Date.--The amendment made by this section shall apply 
to activities after the date of the enactment of this Act.

                       PART III--OTHER PROVISIONS

SEC. 631. AFFIRMATION OF CONSOLIDATED RETURN REGULATION AUTHORITY.

    (a) In General.--Section 1502 (relating to consolidated return 
regulations) is amended by adding at the end the following new 
sentence: ``In prescribing such regulations, the Secretary may 
prescribe rules applicable to corporations filing consolidated returns 
under section 1501 that are different from other provisions of this 
title that would apply if such corporations filed separate returns.''
    (b) Result Not Overturned.--Notwithstanding subsection (a), the 
Internal Revenue Code of 1986 shall be construed by treating Treasury 
regulation Sec. 1.1502-20(c)(1)(iii) (as in effect on January 1, 2001) 
as being inapplicable to the type of factual situation in Rite Aid 
Corporation v. United States, 255 F.3d 1357 (Fed. Cir. 2001).
    (c) Effective Date.--The provisions of this section shall apply to 
taxable years beginning before, on, or after the date of the enactment 
of this Act.

          Subtitle B--Tax Treatment of Inversion Transactions

SEC. 641. TAX TREATMENT OF INVERTED CORPORATE ENTITIES.

    (a) In General.--Subchapter C of chapter 80 (relating to provisions 
affecting more than one subtitle) is amended by adding at the end the 
following new section:

``SEC. 7874. RULES RELATING TO INVERTED CORPORATE ENTITIES.

    ``(a) Inverted Corporations Treated as Domestic Corporations.--
            ``(1) In general.--If a foreign incorporated entity is 
        treated as an inverted domestic corporation, then, 
        notwithstanding section 7701(a)(4), such entity shall be 
        treated for purposes of this title as a domestic corporation.
            ``(2) Inverted domestic corporation.--For purposes of this 
        section, a foreign incorporated entity shall be treated as an 
        inverted domestic corporation if, pursuant to a plan (or a 
        series of related transactions)--
                    ``(A) the entity completes after March 20, 2002, 
                the direct or indirect acquisition of substantially all 
                of the properties held directly or indirectly by a 
                domestic corporation or substantially all of the 
                properties constituting a trade or business of a 
                domestic partnership,
                    ``(B) after the acquisition at least 80 percent of 
                the stock (by vote or value) of the entity is held--
                            ``(i) in the case of an acquisition with 
                        respect to a domestic corporation, by former 
                        shareholders of the domestic corporation by 
                        reason of holding stock in the domestic 
                        corporation, or
                            ``(ii) in the case of an acquisition with 
                        respect to a domestic partnership, by former 
                        partners of the domestic partnership by reason 
                        of holding a capital or profits interest in the 
                        domestic partnership, and
                    ``(C) the expanded affiliated group which after the 
                acquisition includes the entity does not have 
                substantial business activities in the foreign country 
                in which or under the law of which the entity is 
                created or organized when compared to the total 
                business activities of such expanded affiliated group.
    ``(b) Preservation of Domestic Tax Base In Certain Inversion 
Transactions To Which Subsection (a) Does Not Apply.--
            ``(1) In general.--If a foreign incorporated entity would 
        be treated as an inverted domestic corporation with respect to 
        an acquired entity if either--
                    ``(A) subsection (a)(2)(A) were applied by 
                substituting `after December 31, 1996, and on or before 
                March 20, 2002' for `after March 20, 2002' and 
                subsection (a)(2)(B) were applied by substituting `more 
                than 50 percent' for `at least 80 percent', or
                    ``(B) subsection (a)(2)(B) were applied by 
                substituting `more than 50 percent' for `at least 80 
                percent',
        then the rules of subsection (c) shall apply to any inversion 
        gain of the acquired entity during the applicable period and 
        the rules of subsection (d) shall apply to any related party 
        transaction of the acquired entity during the applicable 
        period. This subsection shall not apply for any taxable year if 
        subsection (a) applies to such foreign incorporated entity for 
        such taxable year.
            ``(2) Acquired entity.--For purposes of this section--
                    ``(A) In general.--The term `acquired entity' means 
                the domestic corporation or partnership substantially 
                all of the properties of which are directly or 
                indirectly acquired in an acquisition described in 
                subsection (a)(2)(A) to which this subsection applies.
                    ``(B) Aggregation rules.--Any domestic person 
                bearing a relationship described in section 267(b) or 
                707(b) to an acquired entity shall be treated as an 
                acquired entity with respect to the acquisition 
                described in subparagraph (A).
            ``(3) Applicable period.--For purposes of this section--
                    ``(A) In general.--The term `applicable period' 
                means the period--
                            ``(i) beginning on the first date 
                        properties are acquired as part of the 
                        acquisition described in subsection (a)(2)(A) 
                        to which this subsection applies, and
                            ``(ii) ending on the date which is 10 years 
                        after the last date properties are acquired as 
                        part of such acquisition.
                    ``(B) Special rule for inversions occurring before 
                march 21, 2002.--In the case of any acquired entity to 
                which paragraph (1)(A) applies, the applicable period 
                shall be the 10-year period beginning on January 1, 
                2002.
    ``(c) Tax on Inversion Gains May Not Be Offset.--If subsection (b) 
applies--
            ``(1) In general.--The taxable income of an acquired entity 
        (or any expanded affiliated group which includes such entity) 
        for any taxable year which includes any portion of the 
        applicable period shall in no event be less than the inversion 
        gain of the entity for the taxable year.
            ``(2) Credits not allowed against tax on inversion gain.--
        Credits shall be allowed against the tax imposed by this 
        chapter on an acquired entity for any taxable year described in 
        paragraph (1) only to the extent such tax exceeds the product 
        of--
                    ``(A) the amount of the inversion gain for the 
                taxable year, and
                    ``(B) the highest rate of tax specified in section 
                11(b)(1).
        The credit allowed by section 901 may be taken into account 
        under the preceding sentence only to the extent of the product 
        of such highest rate and the amount of taxable income from 
        sources without the United States that is not inversion gain.
            ``(3) Special rules for partnerships.--In the case of an 
        acquired entity which is a partnership--
                    ``(A) the limitations of this subsection shall 
                apply at the partner rather than the partnership level,
                    ``(B) the inversion gain of any partner for any 
                taxable year shall be equal to the sum of--
                            ``(i) the partner's distributive share of 
                        inversion gain of the partnership for such 
                        taxable year, plus
                            ``(ii) income or gain required to be 
                        recognized for the taxable year by the partner 
                        under section 367(a), 741, or 1001, or under 
                        any other provision of chapter 1, by reason of 
                        the transfer during the applicable period of 
                        any partnership interest of the partner in such 
                        partnership to the foreign incorporated entity, 
                        and
                    ``(C) the highest rate of tax specified in the rate 
                schedule applicable to the partner under chapter 1 
                shall be substituted for the rate of tax under 
                paragraph (2)(B).
            ``(4) Inversion gain.--For purposes of this section, the 
        term `inversion gain' means any income or gain required to be 
        recognized under section 304, 311(b), 367, 1001, or 1248, or 
        under any other provision of chapter 1, by reason of the 
        transfer during the applicable period of stock or other 
        properties by an acquired entity--
                    ``(A) as part of the acquisition described in 
                subsection (a)(2)(A) to which subsection (b) applies, 
                or
                    ``(B) after such acquisition to a foreign related 
                person.
        The Secretary may provide that income or gain from the sale of 
        inventories or other transactions in the ordinary course of a 
        trade or business shall not be treated as inversion gain under 
        subparagraph (B) to the extent the Secretary determines such 
        treatment would not be inconsistent with the purposes of this 
        section.
            ``(5) Coordination with section 172 and minimum tax.--Rules 
        similar to the rules of paragraphs (3) and (4) of section 
        860E(a) shall apply for purposes of this section.
            ``(6) Statute of limitations.--
                    ``(A) In general.--The statutory period for the 
                assessment of any deficiency attributable to the 
                inversion gain of any taxpayer for any pre-inversion 
                year shall not expire before the expiration of 3 years 
                from the date the Secretary is notified by the taxpayer 
                (in such manner as the Secretary may prescribe) of the 
                acquisition described in subsection (a)(2)(A) to which 
                such gain relates and such deficiency may be assessed 
                before the expiration of such 3-year period 
                notwithstanding the provisions of any other law or rule 
                of law which would otherwise prevent such assessment.
                    ``(B) Pre-inversion year.--For purposes of 
                subparagraph (A), the term `pre-inversion year' means 
                any taxable year if--
                            ``(i) any portion of the applicable period 
                        is included in such taxable year, and
                            ``(ii) such year ends before the taxable 
                        year in which the acquisition described in 
                        subsection (a)(2)(A) is completed.
    ``(d) Special Rules Applicable to Related Party Transactions.--
            ``(1) Annual application for agreements on return 
        positions.--
                    ``(A) In general.--Each acquired entity to which 
                subsection (b) applies shall file with the Secretary an 
                application for an approval agreement under 
                subparagraph (D) for each taxable year which includes a 
                portion of the applicable period. Such application 
                shall be filed at such time and manner, and shall 
                contain such information, as the Secretary may 
                prescribe.
                    ``(B) Secretarial action.--Within 90 days of 
                receipt of an application under subparagraph (A) (or 
                such longer period as the Secretary and entity may 
                agree upon), the Secretary shall--
                            ``(i) enter into an agreement described in 
                        subparagraph (D) for the taxable year covered 
                        by the application,
                            ``(ii) notify the entity that the Secretary 
                        has determined that the application was filed 
                        in good faith and substantially complies with 
                        the requirements for the application under 
                        subparagraph (A), or
                            ``(iii) notify the entity that the 
                        Secretary has determined that the application 
                        was not filed in good faith or does not 
                        substantially comply with such requirements.
                If the Secretary fails to act within the time 
                prescribed under the preceding sentence, the entity 
                shall be treated for purposes of this paragraph as 
                having received notice under clause (ii).
                    ``(C) Failures to comply.--If an acquired entity 
                fails to file an application under subparagraph (A), or 
                the acquired entity receives a notice under 
                subparagraph (B)(iii), for any taxable year, then for 
                such taxable year--
                            ``(i) there shall not be allowed any 
                        deduction, or addition to basis or cost of 
                        goods sold, for amounts paid or incurred, or 
                        losses incurred, by reason of a transaction 
                        between the acquired entity and a foreign 
                        related person,
                            ``(ii) any transfer or license of 
                        intangible property (as defined in section 
                        936(h)(3)(B)) between the acquired entity and a 
                        foreign related person shall be disregarded, 
                        and
                            ``(iii) any cost-sharing arrangement 
                        between the acquired entity and a foreign 
                        related person shall be disregarded.
                    ``(D) Approval agreement.--For purposes of 
                subparagraph (A), the term `approval agreement' means a 
                prefiling, advance pricing, or other agreement 
                specified by the Secretary which contains such 
                provisions as the Secretary determines necessary to 
                ensure that the requirements of sections 163(j), 
                267(a)(3), 482, and 845, and any other provision of 
                this title applicable to transactions between related 
                persons and specified by the Secretary, are met.
            ``(2) Modifications of limitation on interest deduction.--
        In the case of an acquired entity to which subsection (b) 
        applies, section 163(j) shall be applied--
                    ``(A) without regard to paragraph (2)(A)(ii) 
                thereof, and
                    ``(B) by substituting `25 percent' for `50 percent' 
                each place it appears in paragraph (2)(B) thereof.
    ``(e) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Rules for application of subsection (a)(2).--In 
        applying subsection (a)(2) for purposes of subsections (a) and 
        (b), the following rules shall apply:
                    ``(A) Certain stock disregarded.--There shall not 
                be taken into account in determining ownership for 
                purposes of subsection (a)(2)(B)--
                            ``(i) stock held by members of the expanded 
                        affiliated group which includes the foreign 
                        incorporated entity, or
                            ``(ii) stock of such entity which is sold 
                        in a public offering related to the acquisition 
                        described in subsection (a)(2)(A).
                    ``(B) Plan deemed in certain cases.--If a foreign 
                incorporated entity acquires directly or indirectly 
                substantially all of the properties of a domestic 
                corporation or partnership during the 4-year period 
                beginning on the date which is 2 years before the 
                ownership requirements of subsection (a)(2)(B) are met, 
                such actions shall be treated as pursuant to a plan.
                    ``(C) Certain transfers disregarded.--The transfer 
                of properties or liabilities (including by contribution 
                or distribution) shall be disregarded if such transfers 
                are part of a plan a principal purpose of which is to 
                avoid the purposes of this section.
                    ``(D) Special rule for related partnerships.--For 
                purposes of applying subsection (a)(2) to the 
                acquisition of a domestic partnership, except as 
                provided in regulations, all partnerships which are 
                under common control (within the meaning of section 
                482) shall be treated as 1 partnership.
                    ``(E) Treatment of certain rights.--The Secretary 
                shall prescribe such regulations as may be necessary--
                            ``(i) to treat warrants, options, contracts 
                        to acquire stock, convertible debt instruments, 
                        and other similar interests as stock, and
                            ``(ii) to treat stock as not stock.
            ``(2) Expanded affiliated group.--The term `expanded 
        affiliated group' means an affiliated group as defined in 
        section 1504(a) but without regard to section 1504(b), except 
        that section 1504(a) shall be applied by substituting `more 
        than 50 percent' for `at least 80 percent' each place it 
        appears.
            ``(3) Foreign incorporated entity.--The term `foreign 
        incorporated entity' means any entity which is, or but for 
        subsection (a)(1) would be, treated as a foreign corporation 
        for purposes of this title.
            ``(4) Foreign related person.--The term `foreign related 
        person' means, with respect to any acquired entity, a foreign 
        person which--
                    ``(A) bears a relationship to such entity described 
                in section 267(b) or 707(b), or
                    ``(B) is under the same common control (within the 
                meaning of section 482) as such entity.
            ``(5) Subsequent acquisitions by unrelated domestic 
        corporations.--Subject to such conditions, limitations, and 
        exceptions as the Secretary may prescribe, if, after an 
        acquisition described in subsection (a)(2)(A) to which 
        subsection (b) applies--
                    ``(A) a domestic corporation stock of which is 
                traded on an established securities market acquires 
                directly or indirectly substantially all of the 
                properties of an acquired entity,
                    ``(B) before such acquisition such domestic 
                corporation did not have a relationship described in 
                section 267(b) or 707(b), and was not under common 
                control (within the meaning of section 482), with such 
                entity, or any member of an expanded affiliated group 
                including such entity, and
                    ``(C) after such acquisition such acquired entity 
                does not have such a relationship and was not under 
                such common control with any member of the expanded 
                affiliated group which before such acquisition included 
                such entity,
        then this section shall cease to apply to such entity.
    ``(f) Regulations.--The Secretary shall provide such regulations as 
are necessary to carry out this section, including regulations 
providing for such adjustments to the application of this section as 
are necessary to prevent the avoidance of the purposes of this section, 
including the avoidance of such purposes through--
            ``(1) the use of related persons, pass-through or other 
        noncorporate entities, or other intermediaries, or
            ``(2) transactions designed to have persons cease to be (or 
        not become) members of expanded affiliated groups or related 
        persons.''
    (b) Treatment of Agreements.--
            (1) Confidentiality.--
                    (A) Treatment as return information.--Section 
                6103(b)(2) (relating to return information) is amended 
                by striking ``and'' at the end of subparagraph (C), by 
                inserting ``and'' at the end of subparagraph (D), and 
                by inserting after subparagraph (D) the following new 
                subparagraph:
                    ``(E) any approval agreement under section 
                7874(d)(1) to which any preceding subparagraph does not 
                apply and any background information related to the 
                agreement or any application for the agreement,''.
                    (B) Exception from public inspection as written 
                determination.--Section 6110(b)(1)(B) is amended by 
                striking ``or (D)'' and inserting ``, (D), or (E)''.
            (2) Reporting.--The Secretary of the Treasury shall include 
        with any report on advance pricing agreements required to be 
        submitted after the date of the enactment of this Act under 
        section 521(b) of the Ticket to Work and Work Incentives 
        Improvement Act of 1999 (Public Law 106-170) a report regarding 
        approval agreements under section 7874(d)(1) of the Internal 
        Revenue Code of 1986. Such report shall include information 
        similar to the information required with respect to advance 
        pricing agreements and shall be treated for confidentiality 
        purposes in the same manner as the reports on advance pricing 
        agreements are treated under section 521(b)(3) of such Act.
    (c) Information Reporting.--The Secretary of the Treasury shall 
exercise the Secretary's authority under the Internal Revenue Code of 
1986 to require entities involved in transactions to which section 7874 
of such Code (as added by subsection (a)) applies to report to the 
Secretary, shareholders, partners, and such other persons as the 
Secretary may prescribe such information as is necessary to ensure the 
proper tax treatment of such transactions.
    (d) Conforming Amendment.--The table of sections for subchapter C 
of chapter 80 is amended by adding at the end the following new item:

                              ``Sec. 7874. Rules relating to inverted 
                                        corporate entities.''

                   Subtitle C--Reinsurance Agreements

SEC. 651. REINSURANCE OF UNITED STATES RISKS IN FOREIGN JURISDICTIONS.

    (a) In General.--Section 845(a) (relating to allocation in case of 
reinsurance agreement involving tax avoidance or evasion) is amended by 
striking ``source and character'' and inserting ``amount, source, or 
character''.
    (b) Effective Date.--The amendments made by this section shall 
apply to any risk reinsured after April 11, 2002.

      Subtitle D--Extension of Internal Revenue Service User Fees

SEC. 661. EXTENSION OF INTERNAL REVENUE SERVICE USER FEES.

    (a) In General.--Chapter 77 (relating to miscellaneous provisions) 
is amended by adding at the end the following new section:

``SEC. 7527. INTERNAL REVENUE SERVICE USER FEES.

    ``(a) General Rule.--The Secretary shall establish a program 
requiring the payment of user fees for--
            ``(1) requests to the Internal Revenue Service for ruling 
        letters, opinion letters, and determination letters, and
            ``(2) other similar requests.
    ``(b) Program Criteria.--
            ``(1) In general.--The fees charged under the program 
        required by subsection (a)--
                    ``(A) shall vary according to categories (or 
                subcategories) established by the Secretary,
                    ``(B) shall be determined after taking into account 
                the average time for (and difficulty of) complying with 
                requests in each category (and subcategory), and
                    ``(C) shall be payable in advance.
            ``(2) Exemptions, etc.--
                    ``(A) In general.--The Secretary shall provide for 
                such exemptions (and reduced fees) under such program 
                as the Secretary determines to be appropriate.
                    ``(B) Exemption for certain requests regarding 
                pension plans.--The Secretary shall not require payment 
                of user fees under such program for requests for 
                determination letters with respect to the qualified 
                status of a pension benefit plan maintained solely by 1 
                or more eligible employers or any trust which is part 
                of the plan. The preceding sentence shall not apply to 
                any request--
                            ``(i) made after the later of--
                                    ``(I) the fifth plan year the 
                                pension benefit plan is in existence, 
                                or
                                    ``(II) the end of any remedial 
                                amendment period with respect to the 
                                plan beginning within the first 5 plan 
                                years, or
                            ``(ii) made by the sponsor of any prototype 
                        or similar plan which the sponsor intends to 
                        market to participating employers.
                    ``(C) Definitions and special rules.--For purposes 
                of subparagraph (B)--
                            ``(i) Pension benefit plan.--The term 
                        `pension benefit plan' means a pension, profit-
                        sharing, stock bonus, annuity, or employee 
                        stock ownership plan.
                            ``(ii) Eligible employer.--The term 
                        `eligible employer' means an eligible employer 
                        (as defined in section 408(p)(2)(C)(i)(I)) 
                        which has at least 1 employee who is not a 
                        highly compensated employee (as defined in 
                        section 414(q)) and is participating in the 
                        plan. The determination of whether an employer 
                        is an eligible employer under subparagraph (B) 
                        shall be made as of the date of the request 
                        described in such subparagraph.
                            ``(iii) Determination of average fees 
                        charged.--For purposes of any determination of 
                        average fees charged, any request to which 
                        subparagraph (B) applies shall not be taken 
                        into account.
            ``(3) Average fee requirement.--The average fee charged 
        under the program required by subsection (a) shall not be less 
        than the amount determined under the following table:

                                                                Average
``Category                                                          Fee
    Employee plan ruling and opinion..............                $250 
    Exempt organization ruling....................                $350 
    Employee plan determination...................                $300 
    Exempt organization determination.............                $275 
    Chief counsel ruling..........................                $200.
    ``(c) Termination.--No fee shall be imposed under this section with 
respect to requests made after June 30, 2008.''
    (b) Conforming Amendments.--
            (1) The table of sections for chapter 77 is amended by 
        adding at the end the following new item:

                              ``Sec. 7527. Internal Revenue Service 
                                        user fees.''.
            (2) Section 10511 of the Revenue Act of 1987 is repealed.
            (3) Section 620 of the Economic Growth and Tax Relief 
        Reconciliation Act of 2001 is repealed.
    (c) Limitations.--Notwithstanding any other provision of law, any 
fees collected pursuant to section 7527 of the Internal Revenue Code of 
1986, as added by subsection (a), shall not be expended by the Internal 
Revenue Service unless provided by an appropriations Act.
    (d) Effective Date.--The amendments made by this section shall 
apply to requests made after the date of the enactment of this Act.

              Subtitle E--Imposition of Customs User Fees

SEC. 671. CUSTOMS USER FEES.

    Section 13031(j)(3) of the Consolidated Omnibus Budget 
Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)) is amended by striking 
``September 30, 2003'' and inserting ``June 30, 2008''.




                                                       Calendar No. 496

107th CONGRESS

  2d Session

                                H. R. 7

                          [Report No. 107-211]

_______________________________________________________________________

                                 AN ACT

 To provide incentives for charitable contributions by individuals and 
 businesses, to improve the effectiveness and efficiency of government 
 program delivery to individuals and families in need, and to enhance 
   the ability of low-income Americans to gain financial security by 
                            building assets.

_______________________________________________________________________

                             July 16, 2002

                       Reported with an amendment