[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2688 Introduced in Senate (IS)]
109th CONGRESS
2d Session
S. 2688
To amend the Internal Revenue Code of 1986 to encourage private
philanthropy.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 1, 2006
Mr. Isakson introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to encourage private
philanthropy.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Personal Philanthropy Account Act of
2006''.
SEC. 2. PERSONAL PHILANTHROPY ACCOUNTS.
(a) In General.--Part VII of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to additional itemized
deductions for individuals) is amended by redesignating section 224 as
section 225 and by inserting after section 223 the following new
section:
``SEC. 224. PERSONAL PHILANTHROPY ACCOUNTS.
``(a) Allowance of Deduction.--In the case of an individual, there
shall be allowed as a deduction for the taxable year an amount equal to
the aggregate amount paid in cash during such taxable year by or on
behalf of such individual to a personal philanthropy account of such
individual.
``(b) Personal Philanthropy Account.--For purposes of this section,
the term `personal philanthropy account' means a trust created or
organized in the United States exclusively for the purpose of making
distributions for the charitable purposes designated by an individual
who is the account holder of the trust (and designated as an personal
philanthropy account at the time created or organized), but only if the
written governing instrument creating the trust meets the following
requirements:
``(1) No contribution will be accepted unless it is in
cash.
``(2) The trustee is a bank (as defined in section 408(n)),
community foundation, or another person who demonstrates to the
satisfaction of the Secretary that the manner in which that
person will administer the trust will be consistent with the
requirements of this section or who has so demonstrated with
respect to any personal philanthropy account and who is not
disqualified under subsection (f).
``(3) No part of the trust assets will be invested in life
insurance contracts.
``(4) The assets of the trust shall not be commingled with
other property except in a common trust fund or common
investment fund.
``(c) Definitions and Special Rules.--For purposes of this
section--
``(1) Default distribution rules.--
``(A) In general.--No account shall be treated as a
personal philanthropy account unless at all times there
are in effect qualified default charitable organization
designations under subparagraphs (B) and (C).
``(B) Qualified default charitable organization
designation.--For purposes of subparagraph (A), a
qualified default charitable organization designation
in effect under this subparagraph is the designation by
the account holder of an organization to which the
remainder of such account may be made in the form of a
qualified philanthropy payment upon the death of the
account holder in any case in which the account holder
fails to provide by will or other suitable estate
document for the distribution of the assets of such
account.
``(C) Trustee designation.--For purposes of
subparagraph (A), a qualified default charitable
organization designation in effect under this
subparagraph is the designation by the trustee of the
personal philanthropy account of an organization to
which a payment under subparagraph (B) will be made if
the organization designated under subparagraph (B) is
not qualified to receive a qualified philanthropy
payment at the time of such payment.
``(2) Minimum distribution requirements.--
``(A) In general.--No account shall be treated as a
personal philanthropy account for a taxable year unless
such account meets the minimum distribution
requirements for such taxable year.
``(B) Minimum distribution requirement.--An account
meets the minimum distribution requirements for a
taxable year if the aggregate distributions from the
account for the taxable year are not less than 5
percent of the balance of such account as of the last
day of the preceding taxable year.
``(C) Exception for accounts with a balance of less
than $10,000.--Subparagraph (A) shall not apply to any
account for a taxable year if the balance of such
account as of the last day of the preceding taxable
year is less than $10,000.
``(3) Denial of deduction to dependents.--No deduction
shall be allowed under this section to any individual with
respect to whom a deduction under section 151 is allowable to
another taxpayer for a taxable year beginning in the calendar
year in which such individual's taxable year begins.
``(4) Community foundation.--For purposes of this section,
the term `community foundation' means a non-sectarian
organization--
``(A) whose long-term goal is to build permanent,
named component funds established by many separate
donors for the broad-based charitable benefit of the
residents of a defined geographic area, and
``(B) which--
``(i) is described in section 501(c)(3) and
exempt from tax under section 501(a),
``(ii) is not a private foundation, and
``(iii) is not controlled directly or
indirectly by one or more disqualified persons
(as defined in section 4946, determined without
regard to subsection (a)(1)(B) thereof).
``(d) Tax Treatment of Distributions.--
``(1) In general.--Any distribution from a personal
philanthropy account shall be includible in the gross income of
the account holder in the manner as provided in section 72.
``(2) Qualified philanthropy payments.--
``(A) In general.--No amount shall be includible in
gross income under paragraph (1) to the extent that
such distribution is a qualified philanthropy payment.
``(B) Qualified philanthropy payment defined.--For
purposes of this section, the term `qualified
philanthropy payment' means a distribution from a
personal philanthropy account--
``(i) which is made, pursuant to a request
by the account holder, by the trustee of the
account within 30 days after receipt by the
trustee of a certification under subparagraph
(C), and
``(ii) which is paid for a purpose
specified in section 170(c).
A trustee who fails to meet the 30-day requirement of
clause (i) shall be subject to disqualification as a
trustee.
``(C) Organization certification.--For purposes of
subparagraph (B)(i), a certification under this
subparagraph is a certification by an organization
pursuant to a written request by the trustee of a
personal philanthropy account that the organization is
an organization which--
``(i) is described in section 501(c)(3) and
exempt from tax under section 501(a), and
``(ii) is not a personal philanthropy
account.
``(D) Coordination with charitable contributions.--
``(i) No deduction shall be allowed under
sections 170, 642(c), 2055, 2106(a)(2), or 2522
for any amount excluded from gross income under
subparagraph (A),
``(ii) under regulations, the amount
allowable as a deduction under sections 170,
642(c), 2055, 2106(a)(2), or 2522 (as
appropriate) for the taxable year (without
regard to this clause) shall be reduced by the
amount excluded from gross income for the
taxable year under subparagraph (A), and
``(iii) section 170(d) shall not apply to
any amount excluded from gross income under
subparagraph (A).
``(3) Rollover contributions.--
``(A) In general.--Paragraph (1) shall not apply to
any amount paid or distributed from a personal
philanthropy account to the extent that the amount
received is paid, not later than the 60th day after the
date of such payment or distribution, into another
personal philanthropy account of the same account
holder. The preceding sentence shall not apply to any
payment or distribution if it applied to any prior
payment or distribution during the 12-month period
ending on the date of the payment or distribution.
``(B) Heir.--Paragraph (1) shall not apply to any
amount paid or distributed from a personal philanthropy
account of a decedent to the extent that the amount
received is paid, not later than the 60th day after the
date of such payment or distribution, into the personal
philanthropy account of an heir of the decedent, as
designated by the will of the decedent.
``(e) Tax Treatment of Account.--
``(1) In general.--A personal philanthropy account shall be
exempt from taxation under this subtitle. Notwithstanding the
preceding sentence, the personal philanthropy account shall be
subject to the taxes imposed by section 511 (relating to
imposition of tax on unrelated business income of charitable
organizations).
``(2) Account terminations.--Rules similar to the rules of
paragraphs (2) and (4) of section 408(e) shall apply to any
personal philanthropy account.
``(f) Disqualification of Trustee.--The trustee of a personal
philanthropy account shall not be qualified to be a trustee of such
account after a final determination by the Secretary that the trustee
has disbursed more than 10 percent of its payments from personal
philanthropy accounts to non-qualifying organizations in a calendar
year.
``(g) Reports.--The trustee of a personal philanthropy account
shall make such reports regarding such account to the Secretary and to
the holder the account with respect to contributions, distributions,
and such other matters as the Secretary may require. The reports
required by this subsection shall be filed at such time and in such
manner and furnished to such individuals at such time and in such
manner as may be required.''.
(b) Deduction Allowed Whether or Not Individual Itemizes Other
Deductions.--Subsection (a) of section 62 of such Code is amended by
inserting before the flush sentence at the end the following new
paragraph:
``(21) Personal philanthropy accounts.--The deduction
allowed under section 224.''.
(c) Exclusion for Employer Contributions to Personal Philanthropy
Accounts.--
(1) In general.--Part III of subchapter B of chapter 1 of
such Code is amended by inserting after section 139A the
following new section:
``SEC. 139B. CONTRIBUTIONS BY EMPLOYER TO PERSONAL PHILANTHROPY
ACCOUNTS.
``(a) In General.--Gross income of an employee does not include
contributions by the employer to the personal philanthropy account of
the employee.
``(b) Personal Philanthropy Account.--For purposes of this section,
the term `personal philanthropy account' shall have the meaning given
to such term by section 224.
``(c) Exclusion Not to Exceed Compensation.--
``(1) Employees.--The amount excluded from gross income by
subsection (a) with respect to an employee shall not exceed
such employee's wages, salaries, tips, and other employee
compensation which are attributable to such employee's
employment by the employer referred to in such subsection.
``(2) Self-employed individuals.--The amount excluded from
gross income by subsection (a) for contributions with respect
to an individual who is self employed shall not exceed such
individual's earned income (as defined in section 401(c)(2))
derived by the taxpayer from the trade or business with respect
to which the individual is self-employed.
``(3) Community property laws not to apply.--The
limitations under this subsection shall be determined without
regard to community property laws.''.
(2) Conforming amendments.--
(A) Section 3121(a) of such Code is amended by
striking ``or'' at the end of paragraph (21), by
striking the period at the end of paragraph (22) and
inserting ``; or '', and by inserting after paragraph
(22) the following new paragraph:
``(23) any payment made to a personal philanthropy account
(as defined in section 224) of an employee.''.
(B) Section 3231(e) of such Code is amended by
adding at the end the following new paragraph:
``(13) Personal philanthropy account contributions.--The
term `compensation' shall not include any payment made to a
personal philanthropy account (as defined in section 224) of an
employee.''.
(C) Section 3306(b) of such Code is amended by
striking ``or'' at the end of paragraph (18), by
striking the period at the end of paragraph (19) and
inserting ``; or'', and by inserting after paragraph
(19) the following new paragraph:
``(20) any payment made to a personal philanthropy account
(as defined in section 224) of an employee.''.
(D) Section 3401(a) of such Code is amended by
striking ``or'' at the end of paragraph (21), by
striking the period at the end of paragraph (22) and
inserting ``; or'', and by inserting after paragraph
(22) the following new paragraph:
``(23) any payment made to a personal philanthropy account
(as defined in section 224) of an employee.''.
(E) Section 6051(a) of such Code is amended by
striking ``and'' at the end of paragraph (12), by
striking the period at the end of paragraph (13) and
inserting ``, and'', and by inserting after paragraph
(13) the following new paragraph:
``(14) the amount contributed to any personal philanthropy
account (as defined in section 224) of such employee or such
employee's spouse.''.
(d) Prohibited Transactions.--
(1) Exception for taxable distributions from personal
philanthropy accounts.--Subsection (c) of section 4975 of such
Code (defining to prohibited transaction) is amended by adding
at the end the following new paragraph:
``(7) Special rule for personal philanthropy accounts.--An
individual for whose benefit a personal philanthropy account is
established and any contributor to such account shall be exempt
from the tax imposed by this section with respect to any
transaction concerning such account (which would otherwise be
taxable under this section) if section 224(d) applies with
respect to such transaction.''.
(2) Plan defined.--Paragraph (1) of section 4975(e) of such
Code is amended by striking ``or'' at the end of subparagraph
(F), by striking the period at the end of subparagraph (G) and
inserting ``, or'', and by inserting after subparagraph (G) the
following new subparagraph:
``(H) a personal philanthropy account described in
section 224.''.
(e) Penalty on Failure to Report.--Paragraph (2) of section 6693(a)
of such Code (relating to provisions) is amended by striking ``and'' at
the end of subparagraph (D), by striking the period at the end of
subparagraph (E) and inserting ``, and'', and by inserting after
subparagraph (E) the following new subparagraph:
``(F) section 224(f) (relating to personal
philanthropy accounts).''.
(f) Conforming Amendment.--Paragraph (2) of section 26(b) of such
Code is amended by striking ``and'' at the end of subparagraph (S), by
striking the period at the end of subparagraph (T) and inserting ``,
and'', and by adding at the end the following new subparagraph:
``(U) section 224(d)(3) relating to (relating to
additional tax with respect to distributions not used
for charitable contribution purposes).''.
(g) Clerical Amendments.--
(1) The table of sections for part VII of subchapter B of
chapter 1 of such Code is amended by redesignating the item
relating to section 224 as an item relating to section 225 and
by inserting after the item relating to section 223 the
following new item:
``Sec. 224. Personal philanthropy accounts.''.
(2) The table of sections for part III of subchapter B of
chapter 1 of such Code is amended by inserting after the item
relating to section 139A the following new item:
``Sec. 139B. Contributions by employer to personal philanthropy
accounts.''.
(h) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2005.
<all>