Religious Liberty and Charitable Donation Clarification Act of 2006

Mr. Speaker, I yield myself as much time as I may consume. And I am pleased to rise in support of the Religious Liberty and Charitable Donations Act of 2006.

This, ladies and gentlemen, is a continuation of an effort we began in 1997 when Congress responded to cases holding that pre-petition tithes and other charitable contributions could be deemed to be fraudulent transfers, and that the trustee could recoup these tithes from the religious institutions receiving the donations.

We all agreed that this was a clearly perverse result, and to clarify the law we passed the measure, Religious Liberty and Charitable Donation Protection Act of 1998.

Then a funny thing happened. This Congress forgot about the value of religious charity embodied in that legislation. Instead, forsaking the biblical injunction to forgive debts and deal generously with the poor, this Congress became a registered agent for the credit card industry.

How?

Well, it is because of the aggressive overreaching of the lending industry and a Congress willing to write into law any scrap of paper handed to it by large financial institutions that we have come to this point today. The decision in the Diagostino case relied solely on the text of the law Congress passed. It restricts a debtor in chapter 13, with current monthly income above the State median, to the narrow strictures of the means test which relies on what the IRS says a person needs to live on.

We debated the reliance on IRS guidelines to determine what a family needs to survive. We were all told not to worry, the IRS knows best and will provide all. Well, almost all.

It turns out that when you owe the IRS money, they don't want you making donations to your house of worship or to charity. And the IRS rule became a part of the Bankruptcy Code because Members of this House voted to give IRS bureaucrats that power.

We had managed to get a statutory allowance for tithing in the means test and in chapter 13, but the final language pushed through by the sponsors and the credit card industry did an end run around these provisions.

And that is how we got here. And I am glad that there is a will to fix it. This bill will allow chapter 13 debtors to tithe in their plans on the same basis as provided in the section 1325(b)(2)(A)(ii).

Keep in mind that while we are fixing the law for tithes and other charitable donations, basic problems in the law remain unchanged.

By wiping out the allowable expenses in chapter 13 for debtors with an income above the State median and replacing them with rigid IRS- based means tests, the new law still leaves families and small businesses at the tender mercies of the IRS. What else will we find was left out?

When the new law was being considered, Members were assured that the IRS guidelines would provide the right answer in all cases. And as we have discovered, that hasn't worked out as well as the credit card industry said it would.

This bill is supported by the United Way, the Red Cross, the National Council of Churches, Interfaith Alliance, the United Church of Christ, the National Baptist Churches USA, and the African Methodist Episcopal Church and others. I am pleased to urge all Members to support it.

But Members are fooling themselves if they think this is a discrete problem in a law that one proponent has described as perfect and that the sponsors told us was so well drafted that no amendments could even be considered.

The hubris has hurt real Americans and it will again.

Let's fix this mistake. It is the right thing to do, but we had better get used to doing it. The new Code is a disaster, the natural consequence of subcontracting work out of the Congress to lobbyists, which I am sure will be coming to an end very shortly.

I urge the passage of this legislation. I congratulate the chairman of the committee for bringing this matter to our attention.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I move to suspend the rules and pass the Senate bill (S. 4044) to clarify the treatment of certain charitable contributions under title 11, United States Code.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on Senate 4044 currently under consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of S. 4044, the Religious Liberty and Charitable Donation Clarification Act of 2006.

During the 105th Congress the Religious Liberty and Charitable Donation Protection Act of 1998 was signed into law by President Clinton. This bipartisan measure, introduced by Senator Hatch, sought to protect the rights of debtors to continue to make religious and charitable contributions after they filed for bankruptcy relief. In addition, the act protects religious and charitable organizations from having to turn over to bankruptcy trustees donations these organizations received from individuals who subsequently filed for bankruptcy relief.

As many of you will recall, a major overhaul of the Bankruptcy Code was enacted last year as the Bankruptcy Abuse Prevention and Consumer Protection Act. The clear intent of that act was not to disturb the rights of debtors to continue to make charitable contributions or to tithe pursuant to the 1998 act. Nonetheless, at least one court has construed Bankruptcy Code section 1325, amended by the 2005 act, to prohibit chapter 13 debtors with above-median incomes from making charitable contributions or tithing.

To address this judicial confusion, this bill simply clarifies that a chapter 13 debtor who is subject to section 1325(b)(3) of the Bankruptcy Code, may make charitable contributions or tithe to the same extent determined in accordance with Bankruptcy Code section 1325(b)(2)(A)(ii).

S. 4044 is a bipartisan measure that makes good sense. Donations are used by religious or charitable organizations to fund valuable services to society which serve the common good. This principle, for example, is recognized in the Internal Revenue Code's provisions concerning the deductibility of certain charitable contributions. Individuals who, for religious or other reasons, wish to donate to such organizations, even if they are in bankruptcy themselves, should not be deprived of this right.

I urge my colleagues to support this bill.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, just very briefly, bringing this bill up in passing shows that the U.S. House of Representatives on a bipartisan basis has a much bigger heart than the Internal Revenue Service. Some people may have doubted that in the past. We are here to show them that they are wrong.

Mr. Speaker, I yield back the balance of my time.

Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of S. 4404, introduced earlier today.

Mr. President, I ask unanimous consent that the bill be read a third time and passed, the motion to reconsider be laid upon the table, and that any statements relating to the bill be printed in the Record.

The bill (S. 4404) was ordered to be engrossed for a third reading, was read the third time, and passed, as follows: