To amend the Internal Revenue Code of 1986 to deny the exemption from income tax for social clubs found to be practicing prohibited discrimination.

January 7, 2003

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

To amend the Internal Revenue Code of 1986 to deny the exemption from income tax for social clubs found to be practicing prohibited discrimination.

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

SECTION 1. DENIAL OF EXEMPTION FROM TAX FOR SOCIAL CLUBS PRACTICING PROHIBITED DISCRIMINATION.

(a) IN GENERAL- Subsection (i) of section 501 of the Internal Revenue Code of 1986 (relating to prohibition of discrimination by certain social clubs) is amended--

(1) by inserting before the period at the end of the first sentence `, or if, at any time during the taxable year or a prior taxable year, a determination by an appropriate government agency or court that such organization has a pattern or practice of so discriminating against any person became final', and

(2) by adding at the end the following new sentence:

`A final determination shall cease to be taken into account under the first sentence after the date it is established to the satisfaction of the Secretary that the organization no longer engages in discrimination of the type involved in such determination.'

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

END