[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1514 Introduced in Senate (IS)]
108th CONGRESS
1st Session
S. 1514
To amend the Internal Revenue Code of 1986 to reform certain excise
taxes applicable to private foundations, and for other purposes.
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IN THE SENATE OF THE UNITED STATES
July 31 (legislative day, July 21), 2003
Mrs. Hutchison introduced the following bill; which was read twice and
referred to the Committee on Finance
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A BILL
To amend the Internal Revenue Code of 1986 to reform certain excise
taxes applicable to private foundations, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Philanthropy
Expansion and Responsibility Act of 2003''.
(b) Amendment of 1986 Code.--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.
SEC. 2. REFORM OF CERTAIN EXCISE TAXES RELATED TO PRIVATE FOUNDATIONS.
(a) Reduction of Tax on Net Investment Income.--Section 4940(a)
(relating to tax-exempt foundations) is amended by striking ``2
percent'' and inserting ``1 percent''.
(b) Repeal of Reduction in Tax Where Private Foundation Meets
Certain Distribution Requirements.--Section 4940 (relating to excise
tax based on investment income) is amended by striking subsection (e).
(c) Modification of Excise Tax on Self-Dealing.--The second
sentence of section 4941(a)(1) (relating to initial excise tax imposed
on self-dealer) is amended by striking ``5 percent'' and inserting ``25
percent''.
(d) Modification of Excise Tax on Failure To Distribute Income.--
(1) Certain administrative expenses not treated as
distributions.--
(A) In general.--Section 4942(g)(1)(A) (defining
qualifying distributions) is amended by striking
``(including that portion of reasonable and necessary
administrative expenses)'' and inserting ``(including
that portion of reasonable and necessary administrative
expenses which are directly attributable to direct
charitable activities, grant selection activities,
grant monitoring and administration activities,
compliance with applicable Federal, State, or local
law, or furthering public accountability of the private
foundation, except as provided in paragraph (4))''.
(B) Limitations.--Section 4942(g) is amended by
striking paragraph (4) and inserting the following new
paragraphs:
``(4) Limitation on administrative expenses treated as
distributions.--For purposes of paragraph (1)(A), the following
administrative expenses shall not be treated as qualifying
distributions:
``(A) Any compensation paid to persons who are
considered disqualified persons.
``(B) Any traveling expenses incurred for travel
outside the United States.
``(C) Any traveling expenses incurred for
transportation by air solely from one point in the
United States to another point in the United States via
first-class transportation on a commercial aircraft or
via a private aircraft.
``(5) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes of
paragraphs (1) and (4). Such regulations shall provide that
administrative expenses which are excluded from qualifying
distributions solely by reason of the limitations in paragraph
(1) or (4) shall not subject a private foundation to any other
excise taxes imposed by this subchapter.''.
(2) Disallowance not to apply to certain private
foundations.--
(A) In general.--Section 4942(j)(3) (defining
operating foundation) is amended--
(i) by striking ``(within the meaning of
paragraph (1) or (2) of subsection (g))'' each
place it appears, and
(ii) by adding at the end the following new
sentence: ``For purposes of this paragraph, the
term `qualifying distributions' means
qualifying distributions within the meaning of
paragraph (1) or (2) of subsection (g)
(determined without regard to subsection
(g)(4)).''.
(B) Conforming amendment.--Section 4942(f)(2)(C)(i)
is amended by inserting ``(determined without regard to
subsection (g)(4))'' after ``within the meaning of
subsection (g)(1)(A)''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.
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