To provide tax relief for the victims of Hurricane Katrina, to provide incentives for charitable giving, and for other purposes.

September 13, 2005

Mr. GRASSLEY (for himself, Mr. BAUCUS, Mr. LOTT, Ms. LANDRIEU, Mr. VITTER, Mr. COCHRAN, and Mr. SHELBY) introduced the following bill; which was read twice and referred to the Committee on Finance

To provide tax relief for the victims of Hurricane Katrina, to provide incentives for charitable giving, 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; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

(a) Short Title- This Act may be cited as the `Hurricane Katrina Tax Relief Act of 2005'.

(b) Amendment of 1986 Code- Except as otherwise expressly provided, 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.

(c) Table of Contents- The table of contents for this Act is as follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.

Sec. 2. Hurricane Katrina disaster area.

TITLE I--PENALTY FREE USE OF RETIREMENT FUNDS BY NATURAL DISASTER VICTIMS

Sec. 101. Penalty free withdrawals from retirement plans for victims of federally declared natural disasters.

Sec. 102. Income averaging for disaster-relief distributions related to Hurricane Katrina.

Sec. 103. Recontributions of withdrawals for home purchases cancelled due to Hurricane Katrina.

Sec. 104. Loans from qualified plans to victims of Hurricane Katrina.

Sec. 105. Provisions relating to plan amendments.

TITLE II--EMPLOYMENT RELIEF

Sec. 201. Work opportunity tax credit for Hurricane Katrina employee survivors.

Sec. 202. Payroll maintenance tax credit for employers affected by Hurricane Katrina.

TITLE III--CHARITABLE GIVING INCENTIVES

Sec. 301. Temporary increase in limitation on individual and corporate charitable cash contributions.

Sec. 302. Tax-free distributions from individual retirement accounts for charitable purposes.

Sec. 303. Charitable deduction for contributions of food inventories.

Sec. 304. Charitable deduction for contributions of book inventories.

Sec. 305. Additional personal exemption amount for Hurricane Katrina houseguest.

Sec. 306. Increase in standard mileage rate for charitable use of passenger automobile.

TITLE IV--ADDITIONAL TAX RELIEF PROVISIONS

Sec. 401. Exclusions of certain cancellations of indebtedness for victims of Hurricane Katrina.

Sec. 402. Modification to casualty loss rules for victims of Hurricane Katrina.

Sec. 403. Required exercise of authority under section 7508A for tax relief for victims of Hurricane Katrina.

Sec. 404. Renewal of special mortgage financing rules for residences located in Hurricane Katrina disaster area.

Sec. 405. Extension of replacement period for nonrecognition of gain for property located in Hurricane Katrina disaster area.

TITLE V--ADDITIONAL PROVISIONS

Sec. 501. Disclosure to State officials of proposed actions related to exempt organizations.

Sec. 502. Dedication and use of certain fees.

SEC. 2. HURRICANE KATRINA DISASTER AREA.

For purposes of this Act, the term `Hurricane Katrina disaster area' means an area--

(1) with respect to which a major disaster has been declared by the President before September 14, 2005, under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act in connection with Hurricane Katrina, and

(2) which is determined by the President before such date to warrant individual assistance, or individual and public assistance, from the Federal Government under such Act.

TITLE I--PENALTY FREE USE OF RETIREMENT FUNDS BY NATURAL DISASTER VICTIMS

SEC. 101. PENALTY FREE WITHDRAWALS FROM RETIREMENT PLANS FOR VICTIMS OF FEDERALLY DECLARED NATURAL DISASTERS.

(a) In General- Paragraph (2) of section 72(t) (relating to 10-percent additional tax on early distributions from qualified retirement plans) is amended by adding at the end the following new subparagraph:

`(G) DISTRIBUTIONS FROM RETIREMENT PLANS TO VICTIMS OF FEDERALLY DECLARED NATURAL DISASTERS-

`(i) IN GENERAL- Any qualified disaster-relief distribution.

`(ii) AMOUNT DISTRIBUTED MAY BE REPAID-

`(I) IN GENERAL- Any individual who receives a qualified disaster-relief distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was made, make one or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan (as defined in section 402(c)(8)(B)) of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3), as the case may be.

`(II) TREATMENT OF REPAYMENTS FOR DISTRIBUTIONS FROM ELIGIBLE RETIREMENT PLANS OTHER THAN IRAS- For purposes of this title, if a contribution is made pursuant to subclause (I) with respect to a qualified disaster-relief distribution from an eligible retirement plan (as so defined) other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received the qualified disaster-relief distribution in an eligible rollover distribution (as defined in section 402(c)(4)) and as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.

`(III) TREATMENT OF REPAYMENTS FOR DISTRIBUTIONS FROM IRAS- For purposes of this title, if a contribution is made pursuant to subclause (I) with respect to a qualified disaster-relief distribution from an individual retirement plan, then, to the extent of the amount of the contribution, the qualified disaster-relief distribution shall be treated as a distribution described in section 408(d)(3) and as having been transferred to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.

`(IV) APPLICATION TO GOVERNMENTAL SECTION 457 PLANS- In determining whether any distribution is a qualified disaster-relief distribution for purposes of this clause, an eligible deferred compensation plan (as defined in section 457(b)) maintained by an employer described in section 457(e)(1)(A) shall be treated as a qualified retirement plan.

`(iii) QUALIFIED DISASTER-RELIEF DISTRIBUTION- For purposes of this subparagraph, the term `qualified disaster-relief distribution' means any distribution--

`(I) to an individual who has sustained a loss as a result of a major disaster declared under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act and who has a principal place of abode immediately before the declaration in a qualified disaster area, and

`(II) which is made during the 1-year period beginning on the date such declaration is made.

`(iv) QUALIFIED DISASTER AREA- For purposes of this subparagraph, the term `qualified disaster area' means an area--

`(I) with respect to which a major disaster has been declared by the President under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, and

`(II) which is determined by the President to warrant individual assistance, or individual and public assistance, from the Federal Government under such Act.'.

(b) Exemption of Distributions From Trustee to Trustee Transfer and Withholding Rules- Paragraph (4) of section 402(c) (relating to eligible rollover distribution) is amended by striking `and' at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting `, and', and by inserting at the end the following new subparagraph:

`(D) any qualified disaster-relief distribution (within the meaning of section 72(t)(2)(G)).'.

(c) Conforming Amendments-

(1) Section 401(k)(2)(B)(i) is amended by striking `or' at the end of subclause (III), by striking `and' at the end of subclause (IV) and inserting `or', and by inserting after subclause (IV) the following new subclause:

`(V) the date on which a period referred to in section 72(t)(2)(G)(iii)(II) begins (but only to the extent provided in section 72(t)(2)(G)), and'.

(2) Section 403(b)(7)(A)(ii) is amended by inserting `sustains a loss as a result of a major disaster declared under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (but only to the extent provided in section 72(t)(2)(G)),' before `or'.

(3) Section 403(b)(11) is amended by striking `or' at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting `, or', and by inserting after subparagraph (B) the following new subparagraph:

`(C) for distributions to which section 72(t)(2)(G) applies.'.

(d) Effective Date- The amendments made by this section shall apply to distributions received after August 28, 2005.

SEC. 102. INCOME AVERAGING FOR DISASTER-RELIEF DISTRIBUTIONS RELATED TO HURRICANE KATRINA.

(a) In General- In the case of any qualified disaster-relief distribution (within the meaning of section 72(t)(2)(G) of the Internal Revenue Code of 1986) from a qualified retirement plan (as defined in section 4974(c) of such Code) to a qualified individual, unless the taxpayer elects not to have this section apply for any taxable year, any amount required to be included in gross income for such taxable year shall be so included ratably over the 3-taxable year period beginning with such taxable year.

(b) Special Rules-

(1) APPLICATION TO GOVERNMENTAL SECTION 457 PLANS- In determining whether any distribution is a qualified disaster-relief distribution (as so defined) for purposes of this section, an eligible deferred compensation plan (as defined in section 457(b) of such Code) maintained by an employer described in section 457(e)(1)(A) of such Code shall be treated as a qualified retirement plan (as so defined).

(2) CERTAIN RULES TO APPLY- Rules similar to the rules of subparagraph (E) of section 408A(d)(3) of such Code shall apply for purposes of this section.

(c) Qualified Individual- For purposes of this section, the term `qualified individual' means an individual who has sustained a loss as a result of the major disaster declared under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170) in connection with Hurricane Katrina and who has a principal place of abode immediately before the declaration in a Hurricane Katrina disaster area.

SEC. 103. RECONTRIBUTIONS OF WITHDRAWALS FOR HOME PURCHASES CANCELLED DUE TO HURRICANE KATRINA.

(a) Recontributions-

(1) IN GENERAL- Any individual who received a qualified distribution may, at any time during the 6-month period beginning on the day after the disaster declaration date, make one or more contributions in an aggregate amount not to exceed the amount of such qualified distribution to an eligible retirement plan (as defined in section 402(c)(8)(B) of the Internal Revenue Code of 1986) of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16) of such Code, as the case may be.

(2) TREATMENT OF REPAYMENTS-

(A) TREATMENT OF REPAYMENTS FOR DISTRIBUTIONS FROM ELIGIBLE RETIREMENT PLANS OTHER THAN IRAS- For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to paragraph (1) with respect to a qualified distribution from an eligible retirement plan (as so defined) other than an individual retirement plan (as defined in section 7701(a)(37) of such Code), then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received the qualified distribution in an eligible rollover distribution (as defined in section 402(c)(4) of such Code) and as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.

(B) TREATMENT OF REPAYMENTS FOR DISTRIBUTIONS FROM IRAS- For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to paragraph (1) with respect to a qualified distribution from an individual retirement plan (as so defined), then, to the extent of the amount of the contribution, the qualified distribution shall be treated as a distribution described in section 408(d)(3) of such Code and as having been transferred to the eligible retirement plan (as so defined) in a direct trustee to trustee transfer within 60 days of the distribution.

(b) Definitions- For purposes of this section--

(1) QUALIFIED DISTRIBUTION- The term `qualified distribution' means any distribution--

(A) described in section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii), 403(b)(11)(B), 457(d)(1)(A)(iii), or 72(t)(2)(F) of the Internal Revenue Code of 1986,

(B) received after February 28, 2005, and before August 29, 2005, and

(C) which was to be used to purchase or construct a principal residence in a Hurricane Katrina disaster area, but which was not so purchased or constructed.

(2) DISASTER DECLARATION DATE- The term `disaster declaration date' means the date on which the President designated the area as a Hurricane Katrina disaster area.

SEC. 104. LOANS FROM QUALIFIED PLANS TO VICTIMS OF HURRICANE KATRINA.

(a) Increase in Limit on Loans Not Treated as Distributions- In the case of any loan from a qualified employer plan (as defined under section 72(p)(4) of the Internal Revenue Code of 1986) to a qualified individual (as defined in section 102(c)) made after the date of enactment of this Act and before the date which is 1 year after the disaster declaration date (as defined in section 103(b)(2))--

(1) clause (i) of section 72(p)(2)(A) of such Code shall be applied by substituting `$100,000' for `$50,000', and

(2) clause (ii) of such section shall be applied by substituting `the present value of the nonforfeitable accrued benefit of the employee under the plan' for `one-half of the present value of the nonforfeitable accrued benefit of the employee under the plan'.

(b) Delay of Repayment- In the case of a qualified individual (as defined in section 102(c)) with an outstanding loan on or after August 26, 2005, from a qualified employer plan (as defined in section 72(p)(4) of the Internal Revenue Code of 1986)--

(1) if the due date pursuant to subparagraph (B) or (C) of section 72(p)(2) of such Code for any repayment with respect to such loan occurs during the period beginning after August 29, 2005, and ending before August 30, 2006, such due date shall be delayed for 1 year,

(2) any subsequent repayments with respect to any such loan shall be appropriately adjusted to reflect the delay in the due date under paragraph (1) and any interest accruing during such delay, and

(3) in determining the 5-year period and the term of a loan under subparagraph (B) or (C) of section 72(p)(2) of such Code, such period shall be disregarded.

SEC. 105. PROVISIONS RELATING TO PLAN AMENDMENTS.

(a) In General- If this section applies to any plan or contract amendment--

(1) such plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in subsection (b)(2)(A), and

(2) except as provided by the Secretary of the Treasury, such plan shall not fail to meet the requirements of section 411(d)(6) of the Internal Revenue Code of 1986 and section 204(g) of the Employee Retirement Income Security Act of 1974 by reason of such amendment.

(b) Amendments to Which Section Applies-

(1) IN GENERAL- This section shall apply to any amendment to any plan or annuity contract which is made--

(A) pursuant to any amendment made by this title, or pursuant to any regulation issued by the Secretary of the Treasury or the Secretary of Labor under this title, and

(B) on or before the last day of the first plan year beginning on or after January 1, 2007, or such later date as the Secretary of the Treasury may prescribe.

In the case of a governmental plan (as defined in section 414(d) of the Internal Revenue Code of 1986), subparagraph (B) shall be applied by substituting the date which is 2 years after the date otherwise applied under subparagraph (B).

(2) CONDITIONS- This section shall not apply to any amendment unless--

(A) during the period--

(i) beginning on the date the legislative or regulatory amendment described in paragraph (1)(A) takes effect (or in the case of a plan or contract amendment not required by such legislative or regulatory amendment, the effective date specified by the plan), and

(ii) ending on the date described in paragraph (1)(B) (or, if earlier, the date the plan or contract amendment is adopted),

the plan or contract is operated as if such plan or contract amendment were in effect; and

(B) such plan or contract amendment applies retroactively for such period.

TITLE II--EMPLOYMENT RELIEF

SEC. 201. WORK OPPORTUNITY TAX CREDIT FOR HURRICANE KATRINA EMPLOYEE SURVIVORS.

(a) In General- For purposes of section 51 of the Internal Revenue Code of 1986, a Hurricane Katrina employee survivor shall be treated as a member of a targeted group.

(b) Hurricane Katrina Employee Survivor- For purposes of this section, the term `Hurricane Katrina employee survivor' means any individual who is certified by the designated local agency (as defined in section 51(d)(11) of such Code) as an individual who--

(1) on August 28, 2005, had a principal place of abode in a Hurricane Katrina disaster area, and

(2) became unemployed as a result of Hurricane Katrina.

(c) Special Rules for Determining Credit- For purposes of applying subpart F of part IV of subchapter A of chapter 1 of such Code to wages paid or incurred to any Hurricane Katrina employee survivor--

(1) section 51(c)(4) of such Code shall not apply, and

(2) except in the case of an employee of the employer (within the meaning of section 51 of such Code) on August 28, 2005, section 51(i)(2) of such Code shall not apply.

(d) Application of Section- This section shall apply to wages (within the meaning on section 51(c) of such Code) paid or incurred to any individual who begins work--

(1) for an employer during the 1-year period beginning on August 29, 2005, or

(2) in the case of an individual who is being hired for a position the principal place of employment of which is located in a Hurricane Katrina disaster area, for any employer during the 3-year period beginning on such date.

SEC. 202. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS AFFECTED BY HURRICANE KATRINA.

(a) In General- In the case of an eligible employer, there shall be allowed as a credit against the tax imposed by chapter 1 of the Internal Revenue Code of 1986 for the taxable year an amount equal to 40 percent of the qualified wages with respect to each eligible employee for such taxable year. For purposes of the preceding sentence, the amount of qualified wages which may be taken into account with respect to any individual shall not exceed $6,000.

(b) Definitions- For purposes of this section--

(1) ELIGIBLE EMPLOYER- The term `eligible employer' means any employer--

(A) which conducted an active trade or business on August 28, 2005, in a Hurricane Katrina disaster area, and

(B) with respect to whom the trade or business described in subparagraph (A) is inoperable on any day after August 28, 2005, and before January 1, 2006, as a result of damage sustained in connection with Hurricane Katrina.

(2) ELIGIBLE EMPLOYEE- The term `eligible employee' means--

(A) an employee of an eligible employer whose principal place of employment on August 28, 2005, was in a Hurricane Katrina disaster area, or

(B) a Ready Reserve-National Guard employee of an eligible employer who is performing qualified active duty and whose principal place of employment immediately before the date on which such employee began performing such qualified active duty was in a Hurricane Katrina disaster area.

(3) QUALIFIED WAGES- The term `qualified wages' means wages (as defined in section 51(c)(1) of the Internal Revenue Code of 1986, but without regard to section 3306(b)(2)(B) of such Code) paid or incurred by an eligible employer with respect to an eligible employee on any day after August 28, 2005, and before January 1, 2006, which occurs during the period--

(A) beginning on the date on which the trade or business described in paragraph (1) first became inoperable at the principal place of employment of the employee immediately before Hurricane Katrina, and

(B) ending on the date on which such trade or business has resumed significant operations at such principal place of employment.

Such term shall include wages paid without regard to whether the employee performs no services, performs services at a different place of employment than such principal place of employment, or performs services at such principal place of employment before significant operations have resumed.

(4) READY RESERVE-NATIONAL GUARD EMPLOYEE- The term `Ready Reserve-National Guard employee' means an employee who is a member of the Ready Reserve of a reserve component of an Armed Force of the United States as described in section 10142 and 10101 of title 10, United States Code and who is performing qualified active duty.

(5) QUALIFIED ACTIVE DUTY- The term `qualified active duty' means--

(A) active duty, other than the training duty specified in section 10147 of title 10, United States Code (relating to training requirements for Ready Reserve), or section 502(a) of title 32, United States Code (relating to required drills and field exercises for the National Guard), in connection with which an employee is entitled to reemployment rights and other benefits or to a leave of absence from employment under chapter 43 of title 38, United States Code, and

(B) hospitalization incident to such duty.

(c) Certain Rules to Apply- For purposes of this section, rules similar to the rules of sections 51(i)(1), 52, and 280C(a) of the Internal Revenue Code of 1986 of the shall apply.

(d) No Double Benefit- No credit shall be allowed under this section with respect to wages for which a credit is determined under section 51 of the Internal Revenue Code of 1986 (after application of section 201).

(e) Credit to Be Part of General Business Credit- The credit allowed under this section shall be added to the current year business credit under section 38(b) of the Internal Revenue Code of 1986 and shall be treated as a credit allowed under subpart D of part IV of subchapter A of chapter 1 of such Code.

TITLE III--CHARITABLE GIVING INCENTIVES

SEC. 301. TEMPORARY INCREASE IN LIMITATION ON INDIVIDUAL AND CORPORATE CHARITABLE CASH CONTRIBUTIONS.

(a) In General- In the case of qualified contributions made during the period beginning on August 29, 2005, and ending on December 31, 2005, in the case of any taxable year which includes any portion of such period--

(1) subsection (b)(1)(A) of section 170 of the Internal Revenue Code of 1986 shall be applied separately--

(A) first without regard to such contributions, and

(B) next with regard to such contributions by substituting `60 percent of the taxpayer's contribution base less the other contributions allowable under this paragraph for the taxable year' for `50 percent of the taxpayer's contribution base for the taxable year', and

(2) subsection (b)(2) of section 170 of such Code shall be applied separately--

(A) first without regard to such contributions, and

(B) next with regard to such contributions by substituting `15 percent of the taxpayer's taxable income less the other charitable contributions allowable for the taxable year' for `10 percent of the taxpayer's taxable income'.

(b) Qualified Contributions- For purposes of this section, the term `qualified contributions' means any charitable contributions (as defined in section 170(c) of such Code) made in cash to an organization described in section 170(b)(1)(A) of such Code.

(c) Application of Carryover Rules- To the extent qualified contributions increase the amount allowable under section 170 of such Code by reason of subsection (a), such contributions shall not be taken into account under section 170(d) of such Code.

(d) Fiscal Year Taxpayers- In the case of a taxpayer whose taxable year ends after August 28, 2005, and before December 31, 2005, subsection (a) shall apply to only the one taxable year that the taxpayer elects.

SEC. 302. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS FOR CHARITABLE PURPOSES.

(a) In General- Subsection (d) of section 408 (relating to individual retirement accounts) is amended by adding at the end the following new paragraph:

`(8) DISTRIBUTIONS FOR CHARITABLE PURPOSES-

`(A) IN GENERAL- No amount shall be includible in gross income by reason of a qualified charitable distribution.

`(B) QUALIFIED CHARITABLE DISTRIBUTION- For purposes of this paragraph, the term `qualified charitable distribution' means any distribution from an individual retirement account--

`(i) which is made directly by the trustee--

`(I) to an organization described in section 170(c), or

`(II) to a split-interest entity, and

`(ii) which is made on or after--

`(I) in the case of any distribution described in clause (i)(I), the date that the individual for whose benefit the account is maintained has attained age 70 1/2 , and

`(II) in the case of any distribution described in clause (i)(II), the date that such individual has attained age 59 1/2 .

A distribution shall be treated as a qualified charitable distribution only to the extent that the distribution would be includible in gross income without regard to subparagraph (A) and, in the case of a distribution to a split-interest entity, only if no person holds an income interest in the amounts in the split-interest entity attributable to such distribution other than one or more of the following: the individual for whose benefit such account is maintained, the spouse of such individual, or any organization described in section 170(c).

`(C) CONTRIBUTIONS MUST BE OTHERWISE DEDUCTIBLE- For purposes of this paragraph--

`(i) DIRECT CONTRIBUTIONS- A distribution to an organization described in section 170(c) shall be treated as a qualified charitable distribution only if a deduction for the entire distribution would be allowable under section 170 (determined without regard to subsection (b) thereof and this paragraph).

`(ii) SPLIT-INTEREST GIFTS- A distribution to a split-interest entity shall be treated as a qualified charitable distribution only if a deduction for the entire value of the interest in the distribution for the use of an organization described in section 170(c) would be allowable under section 170 (determined without regard to subsection (b) thereof and this paragraph).

`(D) APPLICATION OF SECTION 72- Notwithstanding section 72, in determining the extent to which a distribution is a qualified charitable distribution, the entire amount of the distribution shall be treated as includible in gross income without regard to subparagraph (A) to the extent that such amount does not exceed the aggregate amount which would have been so includible if all amounts were distributed from all individual retirement accounts treated as 1 contract under paragraph (2)(A) for purposes of determining the inclusion on such distribution under section 72. Proper adjustments shall be made in applying section 72 to other distributions in such taxable year and subsequent taxable years.

`(E) SPECIAL RULES FOR SPLIT-INTEREST ENTITIES-

`(i) CHARITABLE REMAINDER TRUSTS- Notwithstanding section 664(b), distributions made from a trust described in subparagraph (G)(i) shall be treated as ordinary income in the hands of the beneficiary to whom is paid the annuity described in section 664(d)(1)(A) or the payment described in section 664(d)(2)(A).

`(ii) POOLED INCOME FUNDS- No amount shall be includible in the gross income of a pooled income fund (as defined in subparagraph (G)(ii)) by reason of a qualified charitable distribution to such fund, and all distributions from the fund which are attributable to qualified charitable distributions shall be treated as ordinary income to the beneficiary.

`(iii) CHARITABLE GIFT ANNUITIES- Qualified charitable distributions made for a charitable gift annuity shall not be treated as an investment in the contract.

`(F) DENIAL OF DEDUCTION- Qualified charitable distributions shall not be taken into account in determining the deduction under section 170.

`(G) SPLIT-INTEREST ENTITY DEFINED- For purposes of this paragraph, the term `split-interest entity' means--

`(i) a charitable remainder annuity trust or a charitable remainder unitrust (as such terms are defined in section 664(d)) which must be funded exclusively by qualified charitable distributions,

`(ii) a pooled income fund (as defined in section 642(c)(5)), but only if the fund accounts separately for amounts attributable to qualified charitable distributions, and

`(iii) a charitable gift annuity (as defined in section 501(m)(5)).

`(H) APPLICATION- This paragraph shall apply to distributions made after August 28, 2005, and before January 1, 2006.'.

(b) Modifications Relating to Information Returns by Certain Trusts-

(1) RETURNS- Section 6034 (relating to returns by trusts described in section 4947(a)(2) or claiming charitable deductions under section 642(c)) is amended to read as follows:

`SEC. 6034. RETURNS BY TRUSTS DESCRIBED IN SECTION 4947(a)(2) OR CLAIMING CHARITABLE DEDUCTIONS UNDER SECTION 642(c).

`(a) Trusts described in Section 4947(a)(2)- Every trust described in section 4947(a)(2) shall furnish such information with respect to the taxable year as the Secretary may by forms or regulations require.

`(b) Trusts claiming a charitable deduction under Section 642(c)-

`(1) IN GENERAL- Every trust not required to file a return under subsection (a) but claiming a deduction under section 642(c) for the taxable year shall furnish such information with respect to such taxable year as the Secretary may by forms or regulations prescribe, including--

`(A) the amount of the deduction taken under section 642(c) within such year,

`(B) the amount paid out within such year which represents amounts for which deductions under section 642(c) have been taken in prior years,

`(C) the amount for which such deductions have been taken in prior years but which has not been paid out at the beginning of such year,

`(D) the amount paid out of principal in the current and prior years for the purposes described in section 642(c),

`(E) the total income of the trust within such year and the expenses attributable thereto, and

`(F) a balance sheet showing the assets, liabilities, and net worth of the trust as of the beginning of such year.

`(2) EXCEPTIONS- Paragraph (1) shall not apply to a trust for any taxable year if--

`(A) all the net income for such year, determined under the applicable principles of the law of trusts, is required to be distributed currently to the beneficiaries, or

`(B) the trust is described in section 4947(a)(1).'.

(2) INCREASE IN PENALTY RELATING TO FILING OF INFORMATION RETURN BY SPLIT-INTEREST TRUSTS- Paragraph (2) of section 6652(c) (relating to returns by exempt organizations and by certain trusts) is amended by adding at the end the following new subparagraph:

`(C) SPLIT-INTEREST TRUSTS- In the case of a trust which is required to file a return under section 6034(a), subparagraphs (A) and (B) of this paragraph shall not apply and paragraph (1) shall apply in the same manner as if such return were required under section 6033, except that--

`(i) the 5 percent limitation in the second sentence of paragraph (1)(A) shall not apply,

`(ii) in the case of any trust with gross income in excess of $250,000, the first sentence of paragraph (1)(A) shall be applied by substituting `$100' for `$20', and the second sentence thereof shall be applied by substituting `$50,000' for `$10,000', and

`(iii) the third sentence of paragraph (1)(A) shall be disregarded.

In addition to any penalty imposed on the trust pursuant to this subparagraph, if the person required to file such return knowingly fails to file the return, such penalty shall also be imposed on such person who shall be personally liable for such penalty.'.

(3) CONFIDENTIALITY OF NONCHARITABLE BENEFICIARIES- Subsection (b) of section 6104 (relating to inspection of annual information returns) is amended by adding at the end the following new sentence: `In the case of a trust which is required to file a return under section 6034(a), this subsection shall not apply to information regarding beneficiaries which are not organizations described in section 170(c).'.

(c) Effective Dates-

(1) SUBSECTION (a)- The amendment made by subsection (a) shall apply to distributions made after August 28, 2005.

(2) SUBSECTION (b)- The amendments made by subsection (b) shall apply to returns for taxable years beginning after December 31, 2004.

SEC. 303. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF FOOD INVENTORIES.

(a) In General- Subsection (e) of section 170 (relating to certain contributions of ordinary income and capital gain property) is amended by adding at the end the following new paragraph:

`(7) APPLICATION OF PARAGRAPH (3) TO CERTAIN CONTRIBUTIONS OF FOOD INVENTORY- For purposes of this section--

`(A) EXTENSION TO INDIVIDUALS- In the case of a charitable contribution of apparently wholesome food--

`(i) paragraph (3)(A) shall be applied without regard to whether the contribution is made by a C corporation, and

`(ii) in the case of a taxpayer other than a C corporation, the aggregate amount of such contributions for any taxable year which may be taken into account under this section shall not exceed 10 percent of the taxpayer's net income for such taxable year from all trades or businesses from which such contributions were made for such taxable year, computed without regard to this section.

`(B) LIMITATION ON REDUCTION- In the case of a charitable contribution of apparently wholesome food, notwithstanding paragraph (3)(B), the amount of the reduction determined under paragraph (1)(A) shall not exceed the amount by which the fair market value of such property exceeds twice the basis of such property.

`(C) DETERMINATION OF BASIS- If a taxpayer--

`(i) does not account for inventories under section 471, and

`(ii) is not required to capitalize indirect costs under section 263A,

the taxpayer may elect, solely for purposes of paragraph (3)(B), to treat the basis of any apparently wholesome food as being equal to 25 percent of the fair market value of such food.

`(D) DETERMINATION OF FAIR MARKET VALUE- In the case of a charitable contribution of apparently wholesome food which is a qualified contribution (within the meaning of paragraph (3), as modified by subparagraph (A) of this paragraph) and which, solely by reason of internal standards of the taxpayer or lack of market, cannot or will not be sold, the fair market value of such contribution shall be determined--

`(i) without regard to such internal standards or such lack of market and

`(ii) by taking into account the price at which the same or substantially the same food items (as to both type and quality) are sold by the taxpayer at the time of the contribution (or, if not so sold at such time, in the recent past).

`(E) APPARENTLY WHOLESOME FOOD- For purposes of this paragraph, the term `apparently wholesome food' has the meaning given such term by section 22(b)(2) of the Bill Emerson Good Samaritan Food Donation Act (42 U.S.C. 1791(b)(2)), as in effect on the date of the enactment of this paragraph.

`(F) APPLICATION- This paragraph shall apply to contributions made after August 28, 2005, and before January 1, 2006.'.

(b) Effective Date- The amendment made by this section shall apply to contributions made after August 28, 2005.

SEC. 304. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF BOOK INVENTORIES.

(a) In General- Section 170(e)(3) (relating to certain contributions of ordinary income and capital gain property) is amended by redesignating subparagraph (C) as subparagraph (D) and by inserting after subparagraph (B) the following new subparagraph:

`(C) SPECIAL RULE FOR CONTRIBUTIONS OF BOOK INVENTORY FOR EDUCATIONAL PURPOSES-

`(i) CONTRIBUTIONS OF BOOK INVENTORY- In determining whether a qualified book contribution is a qualified contribution, subparagraph (A) shall be applied without regard to whether--

`(I) the donee is an organization described in the matter preceding clause (i) of subparagraph (A), and

`(II) the property is to be used by the donee solely for the care of the ill, the needy, or infants.

`(ii) AMOUNT OF REDUCTION- Notwithstanding subparagraph (B), the amount of the reduction determined under paragraph (1)(A) shall not exceed the amount by which the fair market value of the contributed property (as determined by the taxpayer using a bona fide published market price for such book) exceeds twice the basis of such property.

`(iii) QUALIFIED BOOK CONTRIBUTION- For purposes of this paragraph, the term `qualified book contribution' means a charitable contribution of books, but only if the requirements of clauses (iv) and (v) are met.

`(iv) IDENTITY OF DONEE- The requirement of this clause is met if the contribution is to an organization--

`(I) described in subclause (I) or (III) of paragraph (6)(B)(i), or

`(II) described in section 501(c)(3) and exempt from tax under section 501(a) (other than a private foundation, as defined in section 509(a), which is not an operating foundation, as defined in section 4942(j)(3)), which is organized primarily to make books available to the general public at no cost or to operate a literacy program.

`(v) CERTIFICATION BY DONEE- The requirement of this clause is met if, in addition to the certifications required by subparagraph (A) (as modified by this subparagraph), the donee certifies in writing that--

`(I) the books are suitable, in terms of currency, content, and quantity, for use in the donee's educational programs, and

`(II) the donee will use the books in its educational programs.

`(vi) BONA FIDE PUBLISHED MARKET PRICE- For purposes of this subparagraph, the term `bona fide published market price' means, with respect to any book, a price--

`(I) determined using the same printing and edition,

`(II) determined in the usual market in which such a book has been customarily sold by the taxpayer, and

`(III) for which the taxpayer can demonstrate to the satisfaction of the Secretary that the taxpayer customarily sold such books in arm's length transactions within 7 years preceding the contribution of such a book.

`(vii) APPLICATION- This subparagraph shall apply to contributions made after August 28, 2005, and before January 1, 2006.'.

(b) Effective Date- The amendments made by this section shall apply to contributions made after August 28, 2005.

SEC. 305. ADDITIONAL PERSONAL EXEMPTION AMOUNT FOR HURRICANE KATRINA HOUSEGUEST.

(a) In General- In the case of the a taxpayer's taxable year beginning in 2005, the amount allowed as a deduction in computing taxable income of the taxpayer under section 151 of the Internal Revenue Code of 1986 shall be increased by the lesser of--

(1) the product of--

(A) $500, and

(B) the number of Hurricane Katrina houseguests of the taxpayer, or

(2) $2,000.

(b) Hurricane Katrina Houseguest- For purposes of this section, the term `Hurricane Katrina houseguest' means any individual--

(1) who would not otherwise qualify for an exemption amount with respect to the taxpayer for the taxable year,

(2) whose principal place of abode in a Hurricane Katrina disaster area was rendered uninhabitable after August 28, 2005, and

(3) is provided shelter without remuneration for not less than 60 days after August 28, 2005, and before January 1, 2006, by the taxpayer in the taxpayer's principal place of abode.

SEC. 306. INCREASE IN STANDARD MILEAGE RATE FOR CHARITABLE USE OF PASSENGER AUTOMOBILE.

Notwithstanding section 170(i) of the Internal Revenue Code of 1986, for purposes of computing the deduction under section 170 of such Code for use of a passenger automobile for the period beginning on August 29, 2005, and ending before January 1, 2006, the standard mileage rate shall be 50 percent of the standard mileage rate in effect under section 162(a) of such Code at the time of such use. Any increase under this section shall be rounded to the next highest cent.

TITLE IV--ADDITIONAL TAX RELIEF PROVISIONS

SEC. 401. EXCLUSIONS OF CERTAIN CANCELLATIONS OF INDEBTEDNESS FOR VICTIMS OF HURRICANE KATRINA.

(a) In General- For purposes of the Internal Revenue Code of 1986 gross income shall not include any amount which (but for this section) would be includible in gross income by reason of the discharge (in whole or in part) of indebtedness of a taxpayer by a person regularly engaged in the trade or business of commercial lending if the discharge is by reason of the damage sustained by the taxpayer in connection with Hurricane Katrina.

(b) Effective Date- This section shall apply to discharges made on or after August 29, 2005, and before January 1, 2007.

SEC. 402. MODIFICATION TO CASUALTY LOSS RULES FOR VICTIMS OF HURRICANE KATRINA.

In the case of an individual with a personal casualty loss which arises in connection with Hurricane Katrina--

(1) section 165(h)(2)(A) of the Internal Revenue Code of 1986 shall not apply, and

(2) in applying such section to other personal casualty losses during the taxable year, losses to which this section applies shall be disregarded.

SEC. 403. REQUIRED EXERCISE OF AUTHORITY UNDER SECTION 7508A FOR TAX RELIEF FOR VICTIMS OF HURRICANE KATRINA.

(a) Authority Includes Suspension of Payment of Employment and Excise Taxes- Subparagraphs (A) and (B) of section 7508(a)(1) are amended to read as follows:

`(A) Filing any return of income, estate, gift, employment, or excise tax;

`(B) Payment of any income, estate, gift, employment, or excise tax or any installment thereof or of any other liability to the United States in respect thereof;'.

(b) Application to Victims of Hurricane Katrina- In the case of any taxpayer determined by the Secretary of the Treasury to be affected by the Presidentially declared disaster relating to Hurricane Katrina, any relief provided by the Secretary of the Treasury under section 7508A of the Internal Revenue Code of 1986 shall be for a period ending not earlier than February 28, 2006, and shall be treated as applying to the filing of returns relating to, and the payment of, employment and excise taxes.

(c) Effective Date- The amendment made by subsection (a) shall apply for any period for performing an act which has not expired before August 29, 2005.

SEC. 404. SPECIAL MORTGAGE FINANCING RULES FOR RESIDENCES LOCATED IN HURRICANE KATRINA DISASTER AREA.

In the case of a residence located in a Hurricane Katrina disaster area, section 143 of the Internal Revenue Code of 1986 shall be applied with the following modifications to financing provided with respect to such residence within 3 years after the date of the disaster declaration:

(1) Subsections (d), (e) and (f) of such section 143 shall be applied as if such residence were a targeted area residence.

(2) Subsection (f)(3) of such section 143 shall be applied without regard to subparagraph (A) thereof.

(3) The limitation under subsection (k)(4) of such section 143 shall be increased (but not above $150,000) to the extent the qualified home-improvement loan is for the repair of damage caused by Hurricane Katrina.

This section shall apply only with respect to bonds issued after August 28, 2005, and before August 29, 2008.

SEC. 405. EXTENSION OF REPLACEMENT PERIOD FOR NONRECOGNITION OF GAIN FOR PROPERTY LOCATED IN HURRICANE KATRINA DISASTER AREA.

Notwithstanding subsections (g) and (h) of section 1033 of the Internal Revenue Code of 1986, clause (i) of section 1033(a)(2)(B) of such Code shall be applied by substituting `5 years' for `2 years' with respect to property which is compulsorily or involuntarily converted as a result of Hurricane Katrina in a Hurricane Katrina disaster area, but only if substantially all of the use of the replacement property is in such area.

TITLE V--ADDITIONAL PROVISIONS

SEC. 501. DISCLOSURE TO STATE OFFICIALS OF PROPOSED ACTIONS RELATED TO EXEMPT ORGANIZATIONS.

(a) In General- Subsection (c) of section 6104 is amended by striking paragraph (2) and inserting the following new paragraphs:

`(2) DISCLOSURE OF PROPOSED ACTIONS RELATED TO CHARITABLE ORGANIZATIONS-

`(A) SPECIFIC NOTIFICATIONS- In the case of an organization to which paragraph (1) applies, the Secretary may disclose to the appropriate State officer--

`(i) a notice of proposed refusal to recognize such organization as an organization described in section 501(c)(3) or a notice of proposed revocation of such organization's recognition as an organization exempt from taxation,

`(ii) the issuance of a letter of proposed deficiency of tax imposed under section 507 or chapter 41 or 42, and

`(iii) the names, addresses, and taxpayer identification numbers of organizations which have applied for recognition as organizations described in section 501(c)(3).

`(B) ADDITIONAL DISCLOSURES- Returns and return information of organizations with respect to which information is disclosed under subparagraph (A) may be made available for inspection by or disclosed to an appropriate State officer.

`(C) PROCEDURES FOR DISCLOSURE- Information may be inspected or disclosed under subparagraph (A) or (B) only--

`(i) upon written request by an appropriate State officer, and

`(ii) for the purpose of, and only to the extent necessary in, the administration of State laws regulating such organizations.

Such information may only be inspected by or disclosed to representatives of the appropriate State officer designated as the individuals who are to inspect or to receive the returns or return information under this paragraph on behalf of such officer. Such representatives shall not include any contractor or agent.

`(D) DISCLOSURES OTHER THAN BY REQUEST- The Secretary may make available for inspection or disclose returns and return information of an organization to which paragraph (1) applies to an appropriate State officer of any State if the Secretary determines that such inspection or disclosure may facilitate the resolution of Federal or State issues relating to the tax-exempt status of such organization.

`(3) DISCLOSURE WITH RESPECT TO CERTAIN OTHER EXEMPT ORGANIZATIONS- Upon written request by an appropriate State officer, the Secretary may make available for inspection or disclosure returns and return information of an organization described in paragraph (2), (4), (6), (7), (8), (10), or (13) of section 501(c) for the purpose of, and to the extent necessary in, the administration of State laws regulating the solicitation or administration of the charitable funds or charitable assets of such organizations. Such information may be inspected only by or disclosed only to representatives of the appropriate State officer designated as the individuals who are to inspect or to receive the returns or return information under this paragraph on behalf of such officer. Such representatives shall not include any contractor or agent.

`(4) USE IN CIVIL JUDICIAL AND ADMINISTRATIVE PROCEEDINGS- Returns and return information disclosed pursuant to this subsection may be disclosed in civil administrative and civil judicial proceedings pertaining to the enforcement of State laws regulating such organizations in a manner prescribed by the Secretary similar to that for tax administration proceedings under section 6103(h)(4).

`(5) NO DISCLOSURE IF IMPAIRMENT- Returns and return information shall not be disclosed under this subsection, or in any proceeding described in paragraph (4), to the extent that the Secretary determines that such disclosure would seriously impair Federal tax administration.

`(6) DEFINITIONS- For purposes of this subsection--

`(A) RETURN AND RETURN INFORMATION- The terms `return' and `return information' have the respective meanings given to such terms by section 6103(b).

`(B) APPROPRIATE STATE OFFICER- The term `appropriate State officer' means--

`(i) the State attorney general,

`(ii) in the case of an organization to which paragraph (1) applies, any other State official charged with overseeing organizations of the type described in section 501(c)(3), and

`(iii) in the case of an organization to which paragraph (3) applies, the head of an agency designated by the State attorney general as having primary responsibility for overseeing the solicitation of funds for charitable purposes.'.

(b) Conforming Amendments-

(1) Subsection (a) of section 6103 is amended--

(A) by inserting `or any appropriate State officer who has or had access to returns or return information under section 6104(c)' after `this section' in paragraph (2), and

(B) by striking `or subsection (n)' in paragraph (3) and inserting `subsection (n), or section 6104(c)'.

(2) Subparagraph (A) of section 6103(p)(3) is amended by inserting `and section 6104(c)' after `section' in the first sentence.

(3) The heading for paragraph (1) of section 6104(c) is amended by inserting `FOR CHARITABLE ORGANIZATIONS' after `RULE'.

(4) Paragraph (2) of section 7213(a) is amended by inserting `or under section 6104(c)' after `6103'.

(5) Paragraph (2) of section 7213A(a) is amended by inserting `or 6104(c)' after `6103'.

(6) Paragraph (2) of section 7431(a) is amended by inserting `(including any disclosure in violation of section 6104(c))' after `6103'.

(c) Effective Date- The amendments made by this section shall take effect on the date of the enactment of this Act but shall not apply to requests made before such date.

SEC. 502. DEDICATION AND USE OF CERTAIN FEES.

Notwithstanding section 202(c) of Public Law 108-89, the Secretary of the Treasury may retain and use fees from employee plan and exempt organization letter rulings and determination letters charged under section 7528 of the Internal Revenue Code of 1986--

(1) in fiscal years 2005 and 2006--

(A) for the administration of the provisions of, and amendments made by, this Act,

(B) to provide taxpayer assistance to victims of Hurricane Katrina, and

(C) to aid the Internal Revenue Service in repairing, rebuilding, and recovering from the damage to Internal Revenue Service offices, equipment, and support caused by Hurricane Katrina, and

(2) in any fiscal year after 2006--

(A) on oversight, enforcement, and administration by the Tax-Exempt and Government Entities Division of the Internal Revenue Service, and

(B) on oversight, enforcement, and administration of section 170 of such Code.

END