To amend the Internal Revenue Code of 1986 to extend and expand the enhanced deduction for charitable contributions of computers to provide greater public access to computers, including access by the poor.

March 6, 2003

Mr. JEFFERSON introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to extend and expand the enhanced deduction for charitable contributions of computers to provide greater public access to computers, including access by the poor.

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 `Digital Divide Elimination Act of 2003'.

SEC. 2. CREDIT FOR PURCHASE OF COMPUTERS BY LOW-INCOME INDIVIDUALS.

(a) IN GENERAL- Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to refundable credits) is amended by inserting after section 36 the following new section:

`SEC. 36A. PURCHASE OF COMPUTERS BY LOW-INCOME INDIVIDUALS.

`(a) IN GENERAL- In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to 50 percent of the amount paid by the taxpayer for qualified computer technology or equipment.

`(b) DOLLAR LIMITATION- The credit allowed by subsection (a) for any taxable year shall not exceed $500.

`(c) DEFINITIONS- For purposes of this section--

`(1) ELIGIBLE INDIVIDUAL- The term `eligible individual' means any taxpayer who is allowed a credit under section 32 (relating to earned income credit) for the taxable year.

`(2) QUALIFIED COMPUTER TECHNOLOGY OR EQUIPMENT-

`(A) IN GENERAL- Except as provided in subparagraph (B), the term `qualified computer technology or equipment' means any computer technology or equipment (as defined in section 170(e)(6)) acquired by purchase (as defined in section 170(d)(2)).

`(B) EXCEPTIONS-

`(i) CERTAIN SOFTWARE EXCLUDED- Such term shall not include game software or any other software which is not necessary for--

`(I) use of the computer for access and use of the Internet (including email), or

`(II) business or educational use.

`(ii) COMPUTER MUST BE CAPABLE OF INTERNET ACCESS- Such term shall not include any computer which does not have a modem or other equipment capable of supporting Internet access.'

(b) CONFORMING AMENDMENTS-

(1) Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by striking `or 36' and inserting `, 36, or 36A'.

(2) The table of sections for subpart C of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 36 the following new item:

`Sec. 36A. Purchase of computers by low-income individuals.'

(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. 3. EXTENSION AND EXPANSION OF ENHANCED DEDUCTION FOR CHARITABLE CONTRIBUTIONS OF COMPUTERS.

(a) EXTENSION- Subparagraph (G) of section 170(e)(6) of the Internal Revenue Code of 1986 (relating to special rule for contributions of computer technology and equipment for elementary or secondary school purposes) is amended by striking `December 31, 2003' and inserting `June 30, 2004'.

(b) EXPANSION- Paragraph (6) of section 170(e) of such Code is amended by redesignating subparagraphs (C), (D), (E), (F) and (G) as subparagraphs (D), (E), (F), (G), and (H), respectively, and by striking all that precedes subparagraph (D) (as so redesignated) and inserting the following:

`(6) SPECIAL RULE FOR CONTRIBUTIONS OF COMPUTER TECHNOLOGY AND EQUIPMENT-

`(A) IN GENERAL- The amount of any qualified computer contribution which is taken into account under this section shall be the greater of--

`(i) the amount determined without regard to paragraph (1), or

`(ii) the amount determined with regard to paragraph (1).

`(B) QUALIFIED COMPUTER CONTRIBUTION- For purposes of this paragraph, the term `qualified computer contribution' means a charitable contribution by a corporation of any computer technology or equipment, but only if--

`(i) the contribution is to a qualified organization,

`(ii) the contribution is made not later than 3 years after the date the taxpayer acquired the property (or in the case of property constructed by the taxpayer, the date the construction of the property is substantially completed),

`(iii) the original use of the property is by the donor or the donee,

`(iv) substantially all of the use of the property by the donee is for use within the United States and, in the case of a qualified educational organization, for educational purposes that are related to the purpose or function of the organization,

`(v) the property is not transferred by the donee in exchange for money, other property, or services, except for shipping, installation and transfer costs,

`(vi) in the case of a qualified educational organization, the property will fit productively into the entity's education plan,

`(vii) the entity's use and disposition of the property will be in accordance with the provisions of clauses (iv) and (v), and

`(viii) the property meets such standards, if any, as the Secretary may prescribe by regulation to assure that the property meets minimum functionality and suitability standards for educational purposes.

`(C) QUALIFIED ORGANIZATION- For purposes of this paragraph--

`(i) IN GENERAL- The term `qualified organization' means--

`(I) any qualified educational organization,

`(II) a public library (within the meaning of section 213(2)(A) of the Library Services and Technology Act (20 U.S.C. 9122(2)(A)), as in effect on the date of the enactment of the Community Renewal Tax Relief Act of 2000, established and maintained by an entity described in subsection (c)(1) or located in an area which is an empowerment zone, enterprise community, or a high-poverty area (as determined by the Secretary),

`(III) any technology center located in such an area, and

`(IV) any entity described in section 501(c)(3) and exempt from tax under section 501(a) that is organized primarily for purposes of providing computers without charge to lower income families.

`(ii) QUALIFIED EDUCATIONAL ORGANIZATION- For purposes of clause (i), the term `qualified educational organization' means--

`(I) an educational organization described in subsection (b)(1)(A)(ii), and

`(II) an entity described in section 501(c)(3) and exempt from tax under section 501(a) (other than an entity described in subclause (I)) that is organized primarily for purposes of supporting elementary and secondary education.'

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

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