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115th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 115-183
======================================================================
TO AMEND THE INTERNAL REVENUE CODE OF 1986 TO MODIFY THE CREDIT FOR
PRODUCTION FROM ADVANCED NUCLEAR POWER FACILITIES
_______
June 20, 2017.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Brady of Texas, from the Committee on Ways and Means, submitted the
following
R E P O R T
[To accompany H.R. 1551]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 1551) to amend the Internal Revenue Code of 1986 to
modify the credit for production from advanced nuclear power
facilities, having considered the same, report favorably
thereon with an amendment and recommend that the bill as
amended do pass.
CONTENTS
Page
I. SUMMARY AND BACKGROUND...........................................1
A. Purpose and Summary................................. 1
B. Background and Need for Legislation................. 1
C. Legislative History................................. 1
II. EXPLANATION OF THE BILL..........................................2
A. Advanced Nuclear Power Production Credit (sec. 45J
of the Code)....................................... 2
III. VOTES OF THE COMMITTEE...........................................4
IV. BUDGET EFFECTS OF THE BILL.......................................5
A. Committee Estimate of Budgetary Effects............. 5
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority...................... 5
C. Cost Estimate Prepared by the Congressional Budget
Office............................................. 5
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.......6
A. Committee Oversight Findings and Recommendations.... 6
B. Statement of General Performance Goals and
Objectives......................................... 6
C. Information Relating to Unfunded Mandates........... 6
D. Applicability of House Rule XXI 5(b)................ 6
E. Tax Complexity Analysis............................. 6
F. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits............................ 7
G. Duplication of Federal Programs..................... 7
H. Disclosure of Directed Rule Makings................. 7
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED............8
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. MODIFICATIONS OF CREDIT FOR PRODUCTION FROM ADVANCED NUCLEAR
POWER FACILITIES.
(a) Treatment of Unutilized Limitation Amounts.--Section 45J(b) of
the Internal Revenue Code of 1986 is amended--
(1) in paragraph (4), by inserting ``or any amendment to''
after ``enactment of'', and
(2) by adding at the end the following new paragraph:
``(5) Allocation of unutilized limitation.--
``(A) In general.--Any unutilized national megawatt
capacity limitation shall be allocated by the Secretary
under paragraph (3) as rapidly as is practicable after
December 31, 2020--
``(i) first to facilities placed in service
on or before such date to the extent that such
facilities did not receive an allocation equal
to their full nameplate capacity, and
``(ii) then to facilities placed in service
after such date in the order in which such
facilities are placed in service.
``(B) Unutilized national megawatt capacity
limitation.--The term `unutilized national megawatt
capacity limitation' means the excess (if any) of--
``(i) 6,000 megawatts, over
``(ii) the aggregate amount of national
megawatt capacity limitation allocated by the
Secretary before January 1, 2021, reduced by
any amount of such limitation which was
allocated to a facility which was not placed in
service before such date.
``(C) Coordination with other provisions.--In the
case of any unutilized national megawatt capacity
limitation allocated by the Secretary pursuant to this
paragraph--
``(i) such allocation shall be treated for
purposes of this section in the same manner as
an allocation of national megawatt capacity
limitation, and
``(ii) subsection (d)(1)(B) shall not apply
to any facility which receives such
allocation.''.
(b) Transfer of Credit by Certain Public Entities.--
(1) In general.--Section 45J of such Code is amended--
(A) by redesignating subsection (e) as subsection
(f), and
(B) by inserting after subsection (d) the following
new subsection:
``(e) Transfer of Credit by Certain Public Entities.--
``(1) In general.--If, with respect to a credit under
subsection (a) for any taxable year--
``(A) the taxpayer would be a qualified public
entity, and
``(B) such entity elects the application of this
paragraph for such taxable year with respect to all (or
any portion specified in such election) of such credit,
the eligible project partner specified in such election (and
not the qualified public entity) shall be treated as the
taxpayer for purposes of this title with respect to such credit
(or such portion thereof).
``(2) Definitions.--For purposes of this subsection--
``(A) Qualified public entity.--The term `qualified
public entity' means--
``(i) a Federal, State, or local government
entity, or any political subdivision, agency,
or instrumentality thereof,
``(ii) a mutual or cooperative electric
company described in section 501(c)(12) or
section 1381(a)(2), or
``(iii) a not-for-profit electric utility
which has or had received a loan or loan
guarantee under the Rural Electrification Act
of 1936.
``(B) Eligible project partner.--The term `eligible
project partner' means--
``(i) any person responsible for, or
participating in, the design or construction of
the advanced nuclear power facility to which
the credit under subsection (a) relates,
``(ii) any person who participates in the
provision of the nuclear steam supply system to
the advanced nuclear power facility to which
the credit under subsection (a) relates,
``(iii) any person who participates in the
provision of nuclear fuel to the advanced
nuclear power facility to which the credit
under subsection (a) relates, or
``(iv) any person who has an ownership
interest in such facility.
``(3) Special rules.--
``(A) Application to partnerships.--In the case of a
credit under subsection (a) which is determined at the
partnership level--
``(i) for purposes of paragraph (1)(A), a
qualified public entity shall be treated as the
taxpayer with respect to such entity's
distributive share of such credit, and
``(ii) the term `eligible project partner'
shall include any partner of the partnership.
``(B) Taxable year in which credit taken into
account.--In the case of any credit (or portion
thereof) with respect to which an election is made
under paragraph (1), such credit shall be taken into
account in the first taxable year of the eligible
project partner ending with, or after, the qualified
public entity's taxable year with respect to which the
credit was determined.
``(C) Treatment of transfer under private use
rules.--For purposes of section 141(b)(1), any benefit
derived by an eligible project partner in connection
with an election under this subsection shall not be
taken into account as a private business use.''.
(2) Special rule for proceeds of transfers for mutual or
cooperative electric companies.--Section 501(c)(12) of such
Code is amended by adding at the end the following new
subparagraph:
``(I) In the case of a mutual or cooperative electric
company described in this paragraph or an organization
described in section 1381(a)(2), income received or
accrued in connection with an election under section
45J(e)(1) shall be treated as an amount collected from
members for the sole purpose of meeting losses and
expenses.''.
(c) Effective Dates.--
(1) Treatment of unutilized limitation amounts.--The
amendment made by subsection (a) shall take effect on the date
of the enactment of this Act.
(2) Transfer of credit by certain public entities.--The
amendments made by subsection (b) shall apply to taxable years
beginning after the date of the enactment of this Act.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
The bill, H.R. 1551, as reported by the Committee on Ways
and Means modifies the credit for production from advanced
nuclear power facilities to clarify the process for re-
allocation of credits in the event any credits are unutilized,
and to add a new credit transfer provision with respect to
certain public entities.
B. Background and Need for Legislation
While the Committee continues to work on comprehensive tax
reform as a critical means of promoting economic growth and job
creation, the Committee believes it is important to provide
immediate clarity and certainty on tax issues affecting
American businesses. The Committee believes that a statutory
rule clarifying the credit allocation process and adding a
credit transfer provision will provide such clarity and
certainty.
C. Legislative History
Background
H.R. 1551 was introduced on March 15, 2017, and was
referred to the Committee on Ways and Means.
Committee action
The Committee on Ways and Means marked up H.R. 1551, a bill
to amend the Internal Revenue Code of 1986 to modify the credit
for production from advanced nuclear power facilities, on June
15, 2017, and ordered the bill, as amended, favorably reported
(with a quorum being present).
II. EXPLANATION OF THE BILL
A. Advanced Nuclear Power Production Credit (sec. 45J of the Code)
PRESENT LAW
Taxpayers producing electricity at a qualified advanced
nuclear power facility may claim a credit equal to 1.8 cents
per kilowatt-hour of electricity produced for the eight-year
period starting when the facility is placed in service.\1\ The
aggregate amount of credit that a taxpayer may claim in any
year during the eight-year period is subject to limitation
based on allocated capacity and an annual limitation as
described below.
---------------------------------------------------------------------------
\1\Sec. 45J. The 1.8-cents credit amount is reduced, but not below
zero, if the annual average contract price per kilowatt-hour of
electricity generated from advanced nuclear power facilities in the
preceding year exceeds eight cents per kilowatt-hour. The eight-cent
price comparison level is indexed for inflation after 1992 (12.6 cents
for 2017).
---------------------------------------------------------------------------
An advanced nuclear facility is any nuclear facility for
the production of electricity, the reactor design for which was
approved after 1993 by the Nuclear Regulatory Commission. For
this purpose, a qualified advanced nuclear facility does not
include any facility for which a substantially similar design
for a facility of comparable capacity was approved before 1994.
A qualified advanced nuclear facility is an advanced
nuclear facility for which the taxpayer has received an
allocation of megawatt capacity from the Secretary of the
Treasury (``the Secretary'') and is placed in service before
January 1, 2021. The taxpayer may only claim credit for
production of electricity equal to the ratio of the allocated
capacity that the taxpayer receives from the Secretary to the
rated nameplate capacity of the taxpayer's facility. For
example, if the taxpayer receives an allocation of 750
megawatts of capacity from the Secretary and the taxpayer's
facility has a rated nameplate capacity of 1,000 megawatts,
then the taxpayer may claim three-quarters of the otherwise
allowable credit, or 1.35 cents per kilowatt-hour, for each
kilowatt-hour of electricity produced at the facility (subject
to the annual limitation described below). The credit is
restricted to 6,000 megawatts of national capacity. Once that
limitation has been reached, the Secretary may make no
additional allocations. Treasury guidance required allocation
applications to be filed before February 1, 2014.\2\
---------------------------------------------------------------------------
\2\I.R.S. Notice 2013-68.
---------------------------------------------------------------------------
A taxpayer operating a qualified facility may claim no more
than $125 million in tax credits per 1,000 megawatts of
allocated capacity in any one year of the eight-year credit
period. If the taxpayer operates a 1,350 megawatt rated
nameplate capacity system and has received an allocation from
the Secretary for 1,350 megawatts of capacity eligible for the
credit, the taxpayer's annual limitation on credits that may be
claimed is equal to 1.35 times $125 million, or $168.75
million. If the taxpayer operates a facility with a nameplate
rated capacity of 1,350 megawatts, but has received an
allocation from the Secretary for 750 megawatts of credit
eligible capacity, then the two limitations apply such that the
taxpayer may claim a credit effectively equal to one cent per
kilowatt-hour of electricity produced (calculated as described
above) subject to an annual credit limitation of $93.75 million
in credits (three-quarters of $125 million).
The credit is part of the general business credit.
REASONS FOR CHANGE
The Committee is concerned about ambiguity in the event
some advanced nuclear power credits that would otherwise be
available to taxpayers may go unused. Specifically, the
Committee wants to ensure the full utilization of all 6,000
megawatts of credit-eligible advanced nuclear power national
capacity by requiring unutilized capacity to be reallocated. In
addition, the Committee wants to ensure that tax-exempt
entities receiving credit allocations may transfer those
credits to other participants in an advanced nuclear power
project. The Committee therefore believes that the
modifications to the credit will provide necessary clarity in
these areas.
EXPLANATION OF PROVISION
The provision modifies the allocation of the national
megawatt capacity limitation for the advanced nuclear power
production credit. To the extent any amount of the 6,000
megawatts of authorized capacity remains unutilized, the
provision requires the Secretary to allocate such capacity
first to facilities placed in service before the year 2021, to
the extent such facilities did not receive an allocation equal
to their full nameplate capacity, and then to facilities placed
in service after such date in the order in which such
facilities are placed in service. The provision provides that
the present law placed-in-service sunset date of January 1,
2021, does not apply with respect to allocations of such
unutilized national megawatt capacity.
The provision also allows qualified public entities to
elect to forgo credits to which they otherwise would be
entitled in favor of an eligible project partner. Qualified
public entities are defined as (1) a Federal, State, or local
government or any political subdivision, agency, or
instrumentality thereof; (2) a mutual or cooperative electric
company; or (3) a not-for-profit electric utility which has or
had received a loan or loan guarantee under the Rural
Electrification Act of 1936.\3\ An eligible project partner
under the provision generally includes any person who designed
or constructed the nuclear power plant, participates in the
provision of nuclear steam or nuclear fuel to the power plant,
or has an ownership interest in the facility. In the case of a
facility owned by a partnership, where the credit is determined
at the partnership level, any electing qualified public entity
is treated as the taxpayer with respect to such entity's
distributive share of such credits, and any other partner is an
eligible project partner.
---------------------------------------------------------------------------
\3\7 U.S.C. sec. 901 et seq.
---------------------------------------------------------------------------
EFFECTIVE DATE
The provision requiring the allocation of unutilized
national megawatt capacity limitation is effective on the date
of enactment. The provision allowing an election by qualified
public entities to forgo credits in favor of an eligible
project partner is effective for taxable years beginning after
the date of enactment.
III. VOTES OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the House of
Representatives, the following statement is made concerning the
vote of the Committee on Ways and Means during the markup
consideration of H.R. 1551, a bill to amend the Internal
Revenue Code of 1986 to modify the credit for production from
advanced nuclear power facilities, on June 15, 2017.
The bill, H.R. 1551, as amended, was ordered favorably
reported to the House of Representatives by a voice vote (with
a quorum being present).
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of the bill, H.R. 1551, as
reported.
The bill, as reported, is estimated to have the following
effect on Federal fiscal year budget receipts for the period
2018-2027:
Fiscal Years
[Millions of dollars]
----------------------------------------------------------------------------------------------------------------
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018-22 2018-27
----------------------------------------------------------------------------------------------------------------
-- \1\ -1 -2 -2 -2 -2 -2 -2 -2 -5 -16
----------------------------------------------------------------------------------------------------------------
NOTE: Details do not add to totals due to rounding.
\1\Loss of less than $500,000.
Pursuant to clause 8 of rule XIII of the Rules of the House
of Representatives, the following statement is made by the
Joint Committee on Taxation with respect to the provisions of
the bill amending the Internal Revenue Code of 1986: The gross
budgetary effect (before incorporating macroeconomic effects)
in any fiscal year is less than 0.25 percent of the current
projected gross domestic product of the United States for that
fiscal year; therefore, the bill is not ``major legislation''
for purposes of requiring that the estimate include the
budgetary effects of changes in economic output, employment,
capital stock and other macroeconomic variables.
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority. The
Committee further states that the revenue-reducing provisions
of the bill involve increased tax expenditures. See amounts
shown in the table in Part IV.A above.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by CBO is
provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 16, 2017.
Hon. Kevin Brady,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1551, a bill to
amend the Internal Revenue Code of 1986 to modify the credit
for production from advanced nuclear power facilities.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Peter
Huether.
Sincerely,
Keith Hall.
Enclosure.
H.R. 1551--A bill to amend the Internal Revenue Code of 1986 to modify
the credit for production from advanced nuclear power
facilities
H.R. 1551 would modify the tax credit for electricity
production from advanced nuclear power facilities. Under
current law, taxpayers producing electricity at advanced
nuclear facilities approved after 1993 and placed into service
before January 1, 2021, can receive a tax credit for an eight-
year period that is based on the amount of electricity they
produce, subject to certain facility-specific and nationwide
limits on electricity capacity. The bill would allow entities
that have reached their facility-specific limits, and have
additional capacity above those limits, to receive an
allocation from the unused nationwide limitation amount, thus
allowing them to receive additional tax credits. The nationwide
limits on qualifying electricity production would not change.
The bill would also allow the additional allocation to apply to
advanced facilities placed into service after December 31,
2020. Finally, H.R. 1551 would allow certain non-profit or
governmental entities to transfer a portion or all of their
credits to taxable project partners. The treatment of
unutilized limitation amounts would be effective upon date of
enactment, and the allowed credit transfers would be effective
for tax years beginning after the date of enactment.
The staff of the Joint Committee on Taxation (JCT)
estimates that the legislation would reduce revenues by about
$16 million over the 2017-2027 period.
The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting
revenues and direct spending. The net changes in revenues that
are subject to those pay-as-you-go procedures are shown in the
following table. Enacting the bill would not affect direct
spending.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 1551, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON JUNE 15, 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017-2022 2017-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN THE DEFICIT
Statutory Pay-As-You-Go Effects...................... 0 0 0 1 2 2 2 2 2 2 2 5 16
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Staff of the Joint Committee on Taxation.
Note: Components may not add to totals due to rounding.
JCT and CBO estimate that enacting the bill would not
increase net direct spending in any of the four consecutive 10-
year periods beginning in 2028 and would increase on-budget
deficits by several million dollars in at least one of those
periods.
JCT has determined that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act.
The CBO staff contact for this estimate is Peter Huether.
The estimate was approved by John McClelland, Assistant
Director for Tax Analysis.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives, the Committee made findings and
recommendations that are reflected in this report.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
D. Applicability of House Rule XXI 5(b)
Rule XXI 5(b) of the Rules of the House of Representatives
provides, in part, that ``A bill or joint resolution,
amendment, or conference report carrying a Federal income tax
rate increase may not be considered as passed or agreed to
unless so determined by a vote of not less than three-fifths of
the Members voting, a quorum being present.'' The Committee has
carefully reviewed the bill and states that the bill does not
involve any Federal income tax rate increases within the
meaning of the rule.
E. Tax Complexity Analysis
Section 4022(b) of the Internal Revenue Service
Restructuring and Reform Act of 1998 (``IRS Reform Act'')
requires the staff of the Joint Committee on Taxation (in
consultation with the Internal Revenue Service and the Treasury
Department) to provide a tax complexity analysis. The
complexity analysis is required for all legislation reported by
the Senate Committee on Finance, the House Committee on Ways
and Means, or any committee of conference if the legislation
includes a provision that directly or indirectly amends the
Internal Revenue Code of 1986 and has widespread applicability
to individuals or small businesses.
Pursuant to clause 3(h)(1) of rule XIII of the Rules of the
House of Representatives, the staff of the Joint Committee on
Taxation has determined that a complexity analysis is not
required under section 4022(b) of the IRS Reform Act because
the bill contains no provisions that amend the Internal Revenue
Code of 1986 and that have ``widespread applicability'' to
individuals or small businesses, within the meaning of the
rule.
F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
G. Duplication of Federal Programs
In compliance with clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes: (1) a
program of the Federal Government known to be duplicative of
another Federal program; (2) a program included in any report
from the Government Accountability Office to Congress pursuant
to section 21 of Public Law 111-139; or (3) a program related
to a program identified in the most recent Catalog of Federal
Domestic Assistance, published pursuant to the Federal Program
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No.
98-169).
H. Disclosure of Directed Rule Makings
In compliance with Sec. 3(i) of H. Res. 5 (115th Congress),
the following statement is made concerning directed rule
makings: The Committee estimates that the bill requires no
directed rule makings within the meaning of such section.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
INTERNAL REVENUE CODE OF 1986
* * * * * * *
Subtitle A--INCOME TAXES
* * * * * * *
CHAPTER 1--NORMAL TAXES AND SURTAXES
* * * * * * *
Subchapter A--DETERMINATION OF TAX LIABILITY
* * * * * * *
PART IV--CREDITS AGAINST TAX
* * * * * * *
Subpart D--BUSINESS RELATED CREDITS
* * * * * * *
Sec. 45J. Credit for production from advanced nuclear power facilities
(a) General rule.--For purposes of section 38, the advanced
nuclear power facility production credit of any taxpayer for
any taxable year is equal to the product of--
(1) 1.8 cents, multiplied by
(2) the kilowatt hours of electricity--
(A) produced by the taxpayer at an advanced
nuclear power facility during the 8-year period
beginning on the date the facility was
originally placed in service, and
(B) sold by the taxpayer to an unrelated
person during the taxable year.
(b) National limitation.--
(1) In general.--The amount of credit which would
(but for this subsection and subsection (c)) be allowed
with respect to any facility for any taxable year shall
not exceed the amount which bears the same ratio to
such amount of credit as--
(A) the national megawatt capacity limitation
allocated to the facility, bears to
(B) the total megawatt nameplate capacity of
such facility.
(2) Amount of national limitation.--The aggregate
amount of national megawatt capacity limitation
allocated by the Secretary under paragraph (3) shall
not exceed 6,000 megawatts.
(3) Allocation of limitation.--The Secretary shall
allocate the national megawatt capacity limitation in
such manner as the Secretary may prescribe.
(4) Regulations.--Not later than 6 months after the
date of the enactment of or any amendment to this
section, the Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the
purposes of this subsection. Such regulations shall
provide a certification process under which the
Secretary, after consultation with the Secretary of
Energy, shall approve and allocate the national
megawatt capacity limitation.
(5) Allocation of unutilized limitation.--
(A) In general.--Any unutilized national
megawatt capacity limitation shall be allocated
by the Secretary under paragraph (3) as rapidly
as is practicable after December 31, 2020--
(i) first to facilities placed in
service on or before such date to the
extent that such facilities did not
receive an allocation equal to their
full nameplate capacity, and
(ii) then to facilities placed in
service after such date in the order in
which such facilities are placed in
service.
(B) Unutilized national megawatt capacity
limitation.--The term ``unutilized national
megawatt capacity limitation'' means the excess
(if any) of--
(i) 6,000 megawatts, over
(ii) the aggregate amount of national
megawatt capacity limitation allocated
by the Secretary before January 1,
2021, reduced by any amount of such
limitation which was allocated to a
facility which was not placed in
service before such date.
(C) Coordination with other provisions.--In
the case of any unutilized national megawatt
capacity limitation allocated by the Secretary
pursuant to this paragraph--
(i) such allocation shall be treated
for purposes of this section in the
same manner as an allocation of
national megawatt capacity limitation,
and
(ii) subsection (d)(1)(B) shall not
apply to any facility which receives
such allocation.
(c) Other limitations.--
(1) Annual limitation.--The amount of the credit
allowable under subsection (a) (after the application
of subsection (b)) for any taxable year with respect to
any facility shall not exceed an amount which bears the
same ratio to $125,000,000 as--
(A) the national megawatt capacity limitation
allocated under subsection (b) to the facility,
bears to
(B) 1,000.
(2) Phaseout of credit.--
(A) In general.--The amount of the credit
determined under subsection (a) shall be
reduced by an amount which bears the same ratio
to the amount of the credit (determined without
regard to this paragraph) as--
(i) the amount by which the reference
price (as defined in section
45(e)(2)(C)) for the calendar year in
which the sale occurs exceeds 8 cents,
bears to
(ii) 3 cents.
(B) Phaseout adjustment based on inflation.--
The 8 cent amount in subparagraph (A) shall be
adjusted by multiplying such amount by the
inflation adjustment factor (as defined in
section 45(e)(2)(B)) for the calendar year in
which the sale occurs. If any amount as
increased under the preceding sentence is not a
multiple of 0.1 cent, such amount shall be
rounded to the nearest multiple of 0.1 cent.
(d) Advanced nuclear power facility.--For purposes of this
section--
(1) In general.--The term ``advanced nuclear power
facility'' means any advanced nuclear facility--
(A) which is owned by the taxpayer and which
uses nuclear energy to produce electricity, and
(B) which is placed in service after the date
of the enactment of this paragraph and before
January 1, 2021.
(2) Advanced nuclear facility.--For purposes of
paragraph (1), the term ``advanced nuclear facility''
means any nuclear facility the reactor design for which
is approved after December 31, 1993, by the Nuclear
Regulatory Commission (and such design or a
substantially similar design of comparable capacity was
not approved on or before such date).
(e) Transfer of Credit by Certain Public Entities.--
(1) In general.--If, with respect to a credit under
subsection (a) for any taxable year--
(A) the taxpayer would be a qualified public
entity, and
(B) such entity elects the application of
this paragraph for such taxable year with
respect to all (or any portion specified in
such election) of such credit,
the eligible project partner specified in such election
(and not the qualified public entity) shall be treated
as the taxpayer for purposes of this title with respect
to such credit (or such portion thereof).
(2) Definitions.--For purposes of this subsection--
(A) Qualified public entity.--The term
``qualified public entity'' means--
(i) a Federal, State, or local
government entity, or any political
subdivision, agency, or instrumentality
thereof,
(ii) a mutual or cooperative electric
company described in section 501(c)(12)
or section 1381(a)(2), or
(iii) a not-for-profit electric
utility which has or had received a
loan or loan guarantee under the Rural
Electrification Act of 1936.
(B) Eligible project partner.--The term
``eligible project partner'' means--
(i) any person responsible for, or
participating in, the design or
construction of the advanced nuclear
power facility to which the credit
under subsection (a) relates,
(ii) any person who participates in
the provision of the nuclear steam
supply system to the advanced nuclear
power facility to which the credit
under subsection (a) relates,
(iii) any person who participates in
the provision of nuclear fuel to the
advanced nuclear power facility to
which the credit under subsection (a)
relates, or
(iv) any person who has an ownership
interest in such facility.
(3) Special rules.--
(A) Application to partnerships.--In the case
of a credit under subsection (a) which is
determined at the partnership level--
(i) for purposes of paragraph (1)(A),
a qualified public entity shall be
treated as the taxpayer with respect to
such entity's distributive share of
such credit, and
(ii) the term ``eligible project
partner'' shall include any partner of
the partnership.
(B) Taxable year in which credit taken into
account.--In the case of any credit (or portion
thereof) with respect to which an election is
made under paragraph (1), such credit shall be
taken into account in the first taxable year of
the eligible project partner ending with, or
after, the qualified public entity's taxable
year with respect to which the credit was
determined.
(C) Treatment of transfer under private use
rules.--For purposes of section 141(b)(1), any
benefit derived by an eligible project partner
in connection with an election under this
subsection shall not be taken into account as a
private business use.
[(e)] (f) Other rules to apply.--Rules similar to the rules
of paragraphs (1), (3), (4), and (5) of section 45(e) shall
apply for purposes of this section.
* * * * * * *
Subchapter F--EXEMPT ORGANIZATIONS
* * * * * * *
PART I--GENERAL RULE
Sec. 501. Exemption from tax on corporations, certain trusts, etc.
(a) Exemption from taxation.--An organization described in
subsection (c) or (d) or section 401(a) shall be exempt from
taxation under this subtitle unless such exemption is denied
under section 502 or 503.
(b) Tax on unrelated business income and certain other
activities.--An organization exempt from taxation under
subsection (a) shall be subject to tax to the extent provided
in parts II, III, and VI of this subchapter, but
(notwithstanding parts II, III, and VI of this subchapter)
shall be considered an organization exempt from income taxes
for the purpose of any law which refers to organizations exempt
from income taxes.
(c) List of exempt organizations.--The following
organizations are referred to in subsection (a):
(1) Any corporation organized under Act of Congress
which is an instrumentality of the United States but
only if such corporation--
(A) is exempt from Federal income taxes--
(i) under such Act as amended and
supplemented before July 18, 1984, or
(ii) under this title without regard
to any provision of law which is not
contained in this title and which is
not contained in a revenue Act, or
(B) is described in subsection (l).
(2) Corporations organized for the exclusive purpose
of holding title to property, collecting income
therefrom, and turning over the entire amount thereof,
less expenses, to an organization which itself is
exempt under this section. Rules similar to the rules
of subparagraph (G) of paragraph (25) shall apply for
purposes of this paragraph.
(3) Corporations, and any community chest, fund, or
foundation, organized and operated exclusively for
religious, charitable, scientific, testing for public
safety, literary, or educational purposes, or to foster
national or international amateur sports competition
(but only if no part of its activities involve the
provision of athletic facilities or equipment), or for
the prevention of cruelty to children or animals, no
part of the net earnings of which inures to the benefit
of any private shareholder or individual, no
substantial part of the activities of which is carrying
on propaganda, or otherwise attempting, to influence
legislation (except as otherwise provided in subsection
(h)), and which does not participate in, or intervene
in (including the publishing or distributing of
statements), any political campaign on behalf of (or in
opposition to) any candidate for public office.
(4)(A) Civic leagues or organizations not organized
for profit but operated exclusively for the promotion
of social welfare, or local associations of employees,
the membership of which is limited to the employees of
a designated person or persons in a particular
municipality, and the net earnings of which are devoted
exclusively to charitable, educational, or recreational
purposes.
(B) Subparagraph (A) shall not apply to an
entity unless no part of the net earnings of
such entity inures to the benefit of any
private shareholder or individual.
(5) Labor, agricultural, or horticultural
organizations.
(6) Business leagues, chambers of commerce, real-
estate boards, boards of trade, or professional
football leagues (whether or not administering a
pension fund for football players), not organized for
profit and no part of the net earnings of which inures
to the benefit of any private shareholder or
individual.
(7) Clubs organized for pleasure, recreation, and
other nonprofitable purposes, substantially all of the
activities of which are for such purposes and no part
of the net earnings of which inures to the benefit of
any private shareholder.
(8) Fraternal beneficiary societies, orders, or
associations--
(A) operating under the lodge system or for
the exclusive benefit of the members of a
fraternity itself operating under the lodge
system, and
(B) providing for the payment of life, sick,
accident, or other benefits to the members of
such society, order, or association or their
dependents.
(9) Voluntary employees' beneficiary associations
providing for the payment of life, sick, accident, or
other benefits to the members of such association or
their dependents or designated beneficiaries, if no
part of the net earnings of such association inures
(other than through such payments) to the benefit of
any private shareholder or individual. For purposes of
providing for the payment of sick and accident benefits
to members of such an association and their dependents,
the term ``dependent'' shall include any individual who
is a child (as defined in section 152(f)(1)) of a
member who as of the end of the calendar year has not
attained age 27.
(10) Domestic fraternal societies, orders, or
associations, operating under the lodge system--
(A) the net earnings of which are devoted
exclusively to religious, charitable,
scientific, literary, educational, and
fraternal purposes, and
(B) which do not provide for the payment of
life, sick, accident, or other benefits.
(11) Teachers' retirement fund associations of a
purely local character, if--
(A) no part of their net earnings inures
(other than through payment of retirement
benefits) to the benefit of any private
shareholder or individual, and
(B) the income consists solely of amounts
received from public taxation, amounts received
from assessments on the teaching salaries of
members, and income in respect of investments.
(12)(A) Benevolent life insurance associations of a
purely local character, mutual ditch or irrigation
companies, mutual or cooperative telephone companies,
or like organizations; but only if 85 percent or more
of the income consists of amounts collected from
members for the sole purpose of meeting losses and
expenses.
(B) In the case of a mutual or cooperative
telephone company, subparagraph (A) shall be
applied without taking into account any income
received or accrued--
(i) from a nonmember telephone
company for the performance of
communication services which involve
members of the mutual or cooperative
telephone company,
(ii) from qualified pole rentals,
(iii) from the sale of display
listings in a directory furnished to
the members of the mutual or
cooperative telephone company, or
(iv) from the prepayment of a loan
under section 306A, 306B, or 311 of the
Rural Electrification Act of 1936 (as
in effect on January 1, 1987).
(C) In the case of a mutual or cooperative
electric company, subparagraph (A) shall be
applied without taking into account any income
received or accrued--
(i) from qualified pole rentals, or
(ii) from any provision or sale of
electric energy transmission services
or ancillary services if such services
are provided on a nondiscriminatory
open access basis under an open access
transmission tariff approved or
accepted by FERC or under an
independent transmission provider
agreement approved or accepted by FERC
(other than income received or accrued
directly or indirectly from a member),
(iii) from the provision or sale of
electric energy distribution services
or ancillary services if such services
are provided on a nondiscriminatory
open access basis to distribute
electric energy not owned by the mutual
or electric cooperative company--
(I) to end-users who are
served by distribution
facilities not owned by such
company or any of its members
(other than income received or
accrued directly or indirectly
from a member), or
(II) generated by a
generation facility not owned
or leased by such company or
any of its members and which is
directly connected to
distribution facilities owned
by such company or any of its
members (other than income
received or accrued directly or
indirectly from a member),
(iv) from any nuclear decommissioning
transaction, or
(v) from any asset exchange or
conversion transaction.
(D) For purposes of this paragraph, the term
``qualified pole rental'' means any rental of a
pole (or other structure used to support wires)
if such pole (or other structure)--
(i) is used by the telephone or
electric company to support one or more
wires which are used by such company in
providing telephone or electric
services to its members, and
(ii) is used pursuant to the rental
to support one or more wires (in
addition to the wires described in
clause (i)) for use in connection with
the transmission by wire of electricity
or of telephone or other
communications.
For purposes of the preceding sentence, the
term ``rental'' includes any sale of the right
to use the pole (or other structure).
(E) For purposes of subparagraph (C)(ii), the
term ``FERC'' means the Federal Energy
Regulatory Commission and references to such
term shall be treated as including the Public
Utility Commission of Texas with respect to any
ERCOT utility (as defined in section
212(k)(2)(B) of the Federal Power Act (16
U.S.C. 824k(k)(2)(B))).
(F) For purposes of subparagraph (C)(iv), the
term ``nuclear decommissioning transaction''
means--
(i) any transfer into a trust, fund,
or instrument established to pay any
nuclear decommissioning costs if the
transfer is in connection with the
transfer of the mutual or cooperative
electric company's interest in a
nuclear power plant or nuclear power
plant unit,
(ii) any distribution from any trust,
fund, or instrument established to pay
any nuclear decommissioning costs, or
(iii) any earnings from any trust,
fund, or instrument established to pay
any nuclear decommissioning costs.
(G) For purposes of subparagraph (C)(v), the
term ``asset exchange or conversion
transaction'' means any voluntary exchange or
involuntary conversion of any property related
to generating, transmitting, distributing, or
selling electric energy by a mutual or
cooperative electric company, the gain from
which qualifies for deferred recognition under
section 1031 or 1033, but only if the
replacement property acquired by such company
pursuant to such section constitutes property
which is used, or to be used, for--
(i) generating, transmitting,
distributing, or selling electric
energy, or
(ii) producing, transmitting,
distributing, or selling natural gas.
(H)(i) In the case of a mutual or cooperative
electric company described in this paragraph or
an organization described in section
1381(a)(2)(C), income received or accrued from
a load loss transaction shall be treated as an
amount collected from members for the sole
purpose of meeting losses and expenses.
(ii) For purposes of clause (i), the
term ``load loss transaction'' means
any wholesale or retail sale of
electric energy (other than to members)
to the extent that the aggregate sales
during the recovery period do not
exceed the load loss mitigation sales
limit for such period.
(iii) For purposes of clause (ii),
the load loss mitigation sales limit
for the recovery period is the sum of
the annual load losses for each year of
such period.
(iv) For purposes of clause (iii), a
mutual or cooperative electric
company's annual load loss for each
year of the recovery period is the
amount (if any) by which--
(I) the megawatt hours of
electric energy sold during
such year to members of such
electric company are less than
(II) the megawatt hours of
electric energy sold during the
base year to such members.
(v) For purposes of clause (iv)(II),
the term ``base year'' means--
(I) the calendar year
preceding the start-up year, or
(II) at the election of the
mutual or cooperative electric
company, the second or third
calendar years preceding the
start-up year.
(vi) For purposes of this
subparagraph, the recovery period is
the 7-year period beginning with the
start-up year.
(vii) For purposes of this
subparagraph, the start-up year is the
first year that the mutual or
cooperative electric company offers
nondiscriminatory open access or the
calendar year which includes the date
of the enactment of this subparagraph,
if later, at the election of such
company.
(viii) A company shall not fail to be
treated as a mutual or cooperative
electric company for purposes of this
paragraph or as a corporation operating
on a cooperative basis for purposes of
section 1381(a)(2)(C) by reason of the
treatment under clause (i).
(ix) For purposes of subparagraph
(A), in the case of a mutual or
cooperative electric company, income
received, or accrued, indirectly from a
member shall be treated as an amount
collected from members for the sole
purpose of meeting losses and expenses.
(I) In the case of a mutual or cooperative
electric company described in this paragraph or
an organization described in section
1381(a)(2), income received or accrued in
connection with an election under section
45J(e)(1) shall be treated as an amount
collected from members for the sole purpose of
meeting losses and expenses.
(13) Cemetery companies owned and operated
exclusively for the benefit of their members or which
are not operated for profit; and any corporation
chartered solely for the purpose of the disposal of
bodies by burial or cremation which is not permitted by
its charter to engage in any business not necessarily
incident to that purpose and no part of the net
earnings of which inures to the benefit of any private
shareholder or individual.
(14)(A) Credit unions without capital stock organized
and operated for mutual purposes and without profit.
(B) Corporations or associations without
capital stock organized before September 1,
1957, and operated for mutual purposes and
without profit for the purpose of providing
reserve funds for, and insurance of shares or
deposits in--
(i) domestic building and loan
associations,
(ii) cooperative banks without
capital stock organized and operated
for mutual purposes and without profit,
(iii) mutual savings banks not having
capital stock represented by shares, or
(iv) mutual savings banks described
in section 591(b)?
(C) Corporations or associations organized
before September 1, 1957, and operated for
mutual purposes and without profit for the
purpose of providing reserve funds for
associations or banks described in clause (i),
(ii), or (iii) of subparagraph (B); but only if
85 percent or more of the income is
attributable to providing such reserve funds
and to investments. This subparagraph shall not
apply to any corporation or association
entitled to exemption under subparagraph (B).
(15)(A) Insurance companies (as defined in section
816(a)) other than life (including interinsurers and
reciprocal underwriters) if--
(i)(I) the gross receipts for the
taxable year do not exceed $600,000,
and
(II) more than 50 percent of
such gross receipts consist of
premiums, or
(ii) in the case of a mutual
insurance company--
(I) the gross receipts of
which for the taxable year do
not exceed $150,000, and
(II) more than 35 percent of
such gross receipts consist of
premiums.
Clause (ii) shall not apply to a company if any
employee of the company, or a member of the employee's
family (as defined in section 2032A(e)(2)), is an
employee of another company exempt from taxation by
reason of this paragraph (or would be so exempt but for
this sentence).
(B) For purposes of subparagraph (A), in
determining whether any company or association
is described in subparagraph (A), such company
or association shall be treated as receiving
during the taxable year amounts described in
subparagraph (A) which are received during such
year by all other companies or associations
which are members of the same controlled group
as the insurance company or association for
which the determination is being made.
(C) For purposes of subparagraph (B), the
term ``controlled group'' has the meaning given
such term by section 831(b)(2)(B)(ii), except
that in applying section 831(b)(2)(B)(ii) for
purposes of this subparagraph, subparagraphs
(B) and (C) of section 1563(b)(2) shall be
disregarded.
(16) Corporations organized by an association subject
to part IV of this subchapter or members thereof, for
the purpose of financing the ordinary crop operations
of such members or other producers, and operated in
conjunction with such association. Exemption shall not
be denied any such corporation because it has capital
stock, if the dividend rate of such stock is fixed at
not to exceed the legal rate of interest in the State
of incorporation or 8 percent per annum, whichever is
greater, on the value of the consideration for which
the stock was issued, and if substantially all such
stock (other than nonvoting preferred stock, the owners
of which are not entitled or permitted to participate,
directly or indirectly, in the profits of the
corporation, on dissolution or otherwise, beyond the
fixed dividends) is owned by such association, or
members thereof; nor shall exemption be denied any such
corporation because there is accumulated and maintained
by it a reserve required by State law or a reasonable
reserve for any necessary purpose.
(17)(A) A trust or trusts forming part of a plan
providing for the payment of supplemental unemployment
compensation benefits, if--
(i) under the plan, it is impossible,
at any time prior to the satisfaction
of all liabilities, with respect to
employees under the plan, for any part
of the corpus or income to be (within
the taxable year or thereafter) used
for, or diverted to, any purpose other
than the providing of supplemental
unemployment compensation benefits,
(ii) such benefits are payable to
employees under a classification which
is set forth in the plan and which is
found by the Secretary not to be
discriminatory in favor of employees
who are highly compensated employees
(within the meaning of section 414(q)),
and
(iii) such benefits do not
discriminate in favor of employees who
are highly compensated employees
(within the meaning of section 414(q)).
A plan shall not be considered
discriminatory within the meaning of
this clause merely because the benefits
received under the plan bear a uniform
relationship to the total compensation,
or the basic or regular rate of
compensation, of the employees covered
by the plan.
(B) In determining whether a plan meets the
requirements of subparagraph (A), any benefits
provided under any other plan shall not be
taken into consideration, except that a plan
shall not be considered discriminatory--
(i) merely because the benefits under
the plan which are first determined in
a nondiscriminatory manner within the
meaning of subparagraph (A) are then
reduced by any sick, accident, or
unemployment compensation benefits
received under State or Federal law (or
reduced by a portion of such benefits
if determined in a nondiscriminatory
manner), or
(ii) merely because the plan provides
only for employees who are not eligible
to receive sick, accident, or
unemployment compensation benefits
under State or Federal law the same
benefits (or a portion of such benefits
if determined in a nondiscriminatory
manner) which such employees would
receive under such laws if such
employees were eligible for such
benefits, or
(iii) merely because the plan
provides only for employees who are not
eligible under another plan (which
meets the requirements of subparagraph
(A)) of supplemental unemployment
compensation benefits provided wholly
by the employer the same benefits (or a
portion of such benefits if determined
in a nondiscriminatory manner) which
such employees would receive under such
other plan if such employees were
eligible under such other plan, but
only if the employees eligible under
both plans would make a classification
which would be nondiscriminatory within
the meaning of subparagraph (A).
(C) A plan shall be considered to meet the
requirements of subparagraph (A) during the
whole of any year of the plan if on one day in
each quarter it satisfies such requirements.
(D) The term ``supplemental unemployment
compensation benefits'' means only--
(i) benefits which are paid to an
employee because of his involuntary
separation from the employment of the
employer (whether or not such
separation is temporary) resulting
directly from a reduction in force, the
discontinuance of a plant or operation,
or other similar conditions, and
(ii) sick and accident benefits
subordinate to the benefits described
in clause (i).
(E) Exemption shall not be denied under
subsection (a) to any organization entitled to
such exemption as an association described in
paragraph (9) of this subsection merely because
such organization provides for the payment of
supplemental unemployment benefits (as defined
in subparagraph (D)(i)).
(18) A trust or trusts created before June 25, 1959,
forming part of a plan providing for the payment of
benefits under a pension plan funded only by
contributions of employees, if--
(A) under the plan, it is impossible, at any
time prior to the satisfaction of all
liabilities with respect to employees under the
plan, for any part of the corpus or income to
be (within the taxable year or thereafter) used
for, or diverted to, any purpose other than the
providing of benefits under the plan,
(B) such benefits are payable to employees
under a classification which is set forth in
the plan and which is found by the Secretary
not to be discriminatory in favor of employees
who are highly compensated employees (within
the meaning of section 414(q)),
(C) such benefits do not discriminate in
favor of employees who are highly compensated
employees (within the meaning of section
414(q)). A plan shall not be considered
discriminatory within the meaning of this
subparagraph merely because the benefits
received under the plan bear a uniform
relationship to the total compensation, or the
basic or regular rate of compensation, of the
employees covered by the plan, and
(D) in the case of a plan under which an
employee may designate certain contributions as
deductible--
(i) such contributions do not exceed
the amount with respect to which a
deduction is allowable under section
219(b)(3),
(ii) requirements similar to the
requirements of section
401(k)(3)(A)(ii) are met with respect
to such elective contributions,
(iii) such contributions are treated
as elective deferrals for purposes of
section 402(g), and
(iv) the requirements of section
401(a)(30) are met.
For purposes of subparagraph (D)(ii), rules similar to
the rules of section 401(k)(8) shall apply. For
purposes of section 4979, any excess contribution under
clause (ii) shall be treated as an excess contribution
under a cash or deferred arrangement.
(19) A post or organization of past or present
members of the Armed Forces of the United States, or an
auxiliary unit or society of, or a trust or foundation
for, any such post or organization--
(A) organized in the United States or any of
its possessions,
(B) at least 75 percent of the members of
which are past or present members of the Armed
Forces of the United States and substantially
all of the other members of which are
individuals who are cadets or are spouses,
widows,, widowers, ancestors, or lineal
descendants of past or present members of the
Armed Forces of the United States or of cadets,
and
(C) no part of the net earnings of which
inures to the benefit of any private
shareholder or individual.
(21)(A) A trust or trusts established in writing,
created or organized in the United States, and
contributed to by any person (except an insurance
company) if--
(i) the purpose of such trust or
trusts is exclusively--
(I) to satisfy, in whole or
in part, the liability of such
person for, or with respect to,
claims for compensation for
disability or death due to
pneumoconiosis under Black Lung
Acts,
(II) to pay premiums for
insurance exclusively covering
such liability,
(III) to pay administrative
and other incidental expenses
of such trust in connection
with the operation of the trust
and the processing of claims
against such person under Black
Lung Acts, and
(IV) to pay accident or
health benefits for retired
miners and their spouses and
dependents (including
administrative and other
incidental expenses of such
trust in connection therewith)
or premiums for insurance
exclusively covering such
benefits; and
(ii) no part of the assets of the
trust may be used for, or diverted to,
any purpose other than--
(I) the purposes described in
clause (i),
(II) investment (but only to
the extent that the trustee
determines that a portion of
the assets is not currently
needed for the purposes
described in clause (i)) in
qualified investments, or
(III) payment into the Black
Lung Disability Trust Fund
established under section 9501,
or into the general fund of the
United States Treasury (other
than in satisfaction of any tax
or other civil or criminal
liability of the person who
established or contributed to
the trust).
(B) No deduction shall be allowed under this
chapter for any payment described in
subparagraph (A)(i)(IV) from such trust.
(C) Payments described in subparagraph
(A)(i)(IV) may be made from such trust during a
taxable year only to the extent that the
aggregate amount of such payments during such
taxable year does not exceed the excess (if
any), as of the close of the preceding taxable
year, of--
(i) the fair market value of the
assets of the trust, over
(ii) 110 percent of the present value
of the liability described in
subparagraph (A)(i)(I) of such person.
The determinations under the preceding sentence
shall be made by an independent actuary using
actuarial methods and assumptions (not
inconsistent with the regulations prescribed
under section 192(c)(1)(A)) each of which is
reasonable and which are reasonable in the
aggregate.
(D) For purposes of this paragraph:
(i) The term ``Black Lung Acts''
means part C of title IV of the Federal
Mine Safety and Health Act of 1977, and
any State law providing compensation
for disability or death due to that
pneumoconiosis.
(ii) The term ``qualified
investments'' means--
(I) public debt securities of
the United States,
(II) obligations of a State
or local government which are
not in default as to principal
or interest, and
(III) time or demand deposits
in a bank (as defined in
section 581) or an insured
credit union (within the
meaning of section 101(7) of
the Federal Credit Union Act,
12 U.S.C. 1752(7)) located in
the United States.
(iii) The term ``miner'' has the same
meaning as such term has when used in
section 402(d) of the Black Lung
Benefits Act (30 U.S.C. 902(d)).
(iv) The term ``incidental expenses''
includes legal, accounting, actuarial,
and trustee expenses.
(22) A trust created or organized in the United
States and established in writing by the plan sponsors
of multiemployer plans if--
(A) the purpose of such trust is
exclusively--
(i) to pay any amount described in
section 4223(c) or (h) of the Employee
Retirement Income Security Act of 1974,
and
(ii) to pay reasonable and necessary
administrative expenses in connection
with the establishment and operation of
the trust and the processing of claims
against the trust,
(B) no part of the assets of the trust may be
used for, or diverted to, any purpose other
than--
(i) the purposes described in
subparagraph (A), or
(ii) the investment in securities,
obligations, or time or demand deposits
described in clause (ii) of paragraph
(21)(D),
(C) such trust meets the requirements of
paragraphs (2), (3), and (4) of section
4223(b), 4223(h), or, if applicable, section
4223(c) of the Employee Retirement Income
Security Act of 1974, and
(D) the trust instrument provides that, on
dissolution of the trust, assets of the trust
may not be paid other than to plans which have
participated in the plan or, in the case of a
trust established under section 4223(h) of such
Act, to plans with respect to which employers
have participated in the fund.
(23) Any association organized before 1880 more than
75 percent of the members of which are present or past
members of the Armed Forces and a principal purpose of
which is to provide insurance and other benefits to
veterans or their dependents.
(24) A trust described in section 4049 of the
Employee Retirement Income Security Act of 1974 (as in
effect on the date of the enactment of the Single-
Employer Pension Plan Amendments Act of 1986).
(25)(A) Any corporation or trust which--
(i) has no more than 35 shareholders
or beneficiaries,
(ii) has only 1 class of stock or
beneficial interest, and
(iii) is organized for the exclusive
purposes of--
(I) acquiring real property
and holding title to, and
collecting income from, such
property, and
(II) remitting the entire
amount of income from such
property (less expenses) to 1
or more organizations described
in subparagraph (C) which are
shareholders of such
corporation or beneficiaries of
such trust.
For purposes of clause (iii), the term ``real
property'' shall not include any interest as a tenant
in common (or similar interest) and shall not include
any indirect interest.
(B) A corporation or trust shall be described
in subparagraph (A) without regard to whether
the corporation or trust is organized by 1 or
more organizations described in subparagraph
(C).
(C) An organization is described in this
subparagraph if such organization is--
(i) a qualified pension, profit
sharing, or stock bonus plan that meets
the requirements of section 401(a),
(ii) a governmental plan (within the
meaning of section 414(d)),
(iii) the United States, any State or
political subdivision thereof, or any
agency or instrumentality of any of the
foregoing, or
(iv) any organization described in
paragraph (3).
(D) A corporation or trust shall in no event
be treated as described in subparagraph (A)
unless such corporation or trust permits its
shareholders or beneficiaries--
(i) to dismiss the corporation's or
trust's investment adviser, following
reasonable notice, upon a vote of the
shareholders or beneficiaries holding a
majority of interest in the corporation
or trust, and
(ii) to terminate their interest in
the corporation or trust by either, or
both, of the following alternatives, as
determined by the corporation or trust:
(I) by selling or exchanging
their stock in the corporation
or interest in the trust
(subject to any Federal or
State securities law) to any
organization described in
subparagraph (C) so long as the
sale or exchange does not
increase the number of
shareholders or beneficiaries
in such corporation or trust
above 35, or
(II) by having their stock or
interest redeemed by the
corporation or trust after the
shareholder or beneficiary has
provided 90 days notice to such
corporation or trust.
(E)(i) For purposes of this title--
(I) a corporation which is a
qualified subsidiary shall not
be treated as a separate
corporation, and
(II) all assets, liabilities,
and items of income, deduction,
and credit of a qualified
subsidiary shall be treated as
assets, liabilities, and such
items (as the case may be) of
the corporation or trust
described in subparagraph (A).
(ii) For purposes of this
subparagraph, the term ``qualified
subsidiary'' means any corporation if,
at all times during the period such
corporation was in existence, 100
percent of the stock of such
corporation is held by the corporation
or trust described in subparagraph (A).
(iii) For purposes of this subtitle,
if any corporation which was a
qualified subsidiary ceases to meet the
requirements of clause (ii), such
corporation shall be treated as a new
corporation acquiring all of its assets
(and assuming all of its liabilities)
immediately before such cessation from
the corporation or trust described in
subparagraph (A) in exchange for its
stock.
(F) For purposes of subparagraph (A), the
term ``real property'' includes any personal
property which is leased under, or in
connection with, a lease of real property, but
only if the rent attributable to such personal
property (determined under the rules of section
856(d)(1)) for the taxable year does not exceed
15 percent of the total rent for the taxable
year attributable to both the real and personal
property leased under, or in connection with,
such lease.
(G)(i) An organization shall not be treated
as failing to be described in this paragraph
merely by reason of the receipt of any
otherwise disqualifying income which is
incidentally derived from the holding of real
property.
(ii) Clause (i) shall not apply if
the amount of gross income described in
such clause exceeds 10 percent of the
organization's gross income for the
taxable year unless the organization
establishes to the satisfaction of the
Secretary that the receipt of gross
income described in clause (i) in
excess of such limitation was
inadvertent and reasonable steps are
being taken to correct the
circumstances giving rise to such
income.
(26) Any membership organization if--
(A) such organization is established by a
State exclusively to provide coverage for
medical care (as defined in section 213(d)) on
a not-for-profit basis to individuals described
in subparagraph (B) through--
(i) insurance issued by the
organization, or
(ii) a health maintenance
organization under an arrangement with
the organization,
(B) the only individuals receiving such
coverage through the organization are
individuals--
(i) who are residents of such State,
and
(ii) who, by reason of the existence
or history of a medical condition--
(I) are unable to acquire
medical care coverage for such
condition through insurance or
from a health maintenance
organization, or
(II) are able to acquire such
coverage only at a rate which
is substantially in excess of
the rate for such coverage
through the membership
organization,
(C) the composition of the membership in such
organization is specified by such State, and
(D) no part of the net earnings of the
organization inures to the benefit of any
private shareholder or individual.
A spouse and any qualifying child (as defined in
section 24(c)) of an individual described in
subparagraph (B) (without regard to this sentence)
shall be treated as described in subparagraph (B).
(27)(A) Any membership organization if--
(i) such organization is established
before June 1, 1996, by a State
exclusively to reimburse its members
for losses arising under workmen's
compensation acts,
(ii) such State requires that the
membership of such organization consist
of--
(I) all persons who issue
insurance covering workmen's
compensation losses in such
State, and
(II) all persons and
governmental entities who self-
insure against such losses, and
(iii) such organization operates as a
non-profit organization by--
(I) returning surplus income
to its members or workmen's
compensation policyholders on a
periodic basis, and
(II) reducing initial
premiums in anticipation of
investment income.
(B) Any organization (including a mutual
insurance company) if--
(i) such organization is created by
State law and is organized and operated
under State law exclusively to--
(I) provide workmen's
compensation insurance which is
required by State law or with
respect to which State law
provides significant
disincentives if such insurance
is not purchased by an
employer, and
(II) provide related coverage
which is incidental to
workmen's compensation
insurance,
(ii) such organization must provide
workmen's compensation insurance to any
employer in the State (for employees in
the State or temporarily assigned out-
of-State) which seeks such insurance
and meets other reasonable requirements
relating thereto,
(iii)(I) the State makes a financial
commitment with respect to such
organization either by extending the
full faith and credit of the State to
the initial debt of such organization
or by providing the initial operating
capital of such organization, and (II)
in the case of periods after the date
of enactment of this subparagraph, the
assets of such organization revert to
the State upon dissolution or State law
does not permit the dissolution of such
organization, and
(iv) the majority of the board of
directors or oversight body of such
organization are appointed by the chief
executive officer or other executive
branch official of the State, by the
State legislature, or by both.
(28) The National Railroad Retirement Investment
Trust established under section 15(j) of the Railroad
Retirement Act of 1974.
(29) CO-OP health insurance issuers.--
(A) In general.--A qualified nonprofit health
insurance issuer (within the meaning of section
1322 of the Patient Protection and Affordable
Care Act) which has received a loan or grant
under the CO-OP program under such section, but
only with respect to periods for which the
issuer is in compliance with the requirements
of such section and any agreement with respect
to the loan or grant.
(B) Conditions for exemption.--Subparagraph
(A) shall apply to an organization only if--
(i) the organization has given notice
to the Secretary, in such manner as the
Secretary may by regulations prescribe,
that it is applying for recognition of
its status under this paragraph,
(ii) except as provided in section
1322(c)(4) of the Patient Protection
and Affordable Care Act, no part of the
net earnings of which inures to the
benefit of any private shareholder or
individual,
(iii) no substantial part of the
activities of which is carrying on
propaganda, or otherwise attempting, to
influence legislation, and
(iv) the organization does not
participate in, or intervene in
(including the publishing or
distributing of statements), any
political campaign on behalf of (or in
opposition to) any candidate for public
office.
(d) Religious and apostolic organizations.--The following
organizations are referred to in subsection (a): Religious or
apostolic associations or corporations, if such associations or
corporations have a common treasury or community treasury, even
if such associations or corporations engage in business for the
common benefit of the members, but only if the members thereof
include (at the time of filing their returns) in their gross
income their entire pro rata shares, whether distributed or
not, of the taxable income of the association or corporation
for such year. Any amount so included in the gross income of a
member shall be treated as a dividend received.
(e) Cooperative hospital service organizations.--For purposes
of this title, an organization shall be treated as an
organization organized and operated exclusively for charitable
purposes, if--
(1) such organization is organized and operated
solely--
(A) to perform, on a centralized basis, one
or more of the following services which, if
performed on its own behalf by a hospital which
is an organization described in subsection
(c)(3) and exempt from taxation under
subsection (a), would constitute activities in
exercising or performing the purpose or
function constituting the basis for its
exemption: data processing, purchasing
(including the purchasing of insurance on a
group basis), warehousing, billing and
collection (including the purchase of patron
accounts receivable on a recourse basis), food,
clinical, industrial engineering, laboratory,
printing, communications, record center, and
personnel (including selection, testing,
training, and education of personnel) services;
and
(B) to perform such services solely for two
or more hospitals each of which is--
(i) an organization described in
subsection (c)(3) which is exempt from
taxation under subsection (a),
(ii) a constituent part of an
organization described in subsection
(c)(3) which is exempt from taxation
under subsection (a) and which, if
organized and operated as a separate
entity, would constitute an
organization described in subsection
(c)(3), or
(iii) owned and operated by the
United States, a State, the District of
Columbia, or a possession of the United
States, or a political subdivision or
an agency or instrumentality of any of
the foregoing;
(2) such organization is organized and operated on a
cooperative basis and allocates or pays, within 81/2
months after the close of its taxable year, all net
earnings to patrons on the basis of services performed
for them; and
(3) if such organization has capital stock, all of
such stock outstanding is owned by its patrons.
For purposes of this title, any organization which, by reason
of the preceding sentence, is an organization described in
subsection (c)(3) and exempt from taxation under subsection
(a), shall be treated as a hospital and as an organization
referred to in section 170(b)(1)(A)(iii).
(f) Cooperative service organizations of operating
educational organizations.--For purposes of this title, if an
organization is--
(1) organized and operated solely to hold, commingle,
and collectively invest and reinvest (including
arranging for and supervising the performance by
independent contractors of investment services related
thereto) in stocks and securities, the moneys
contributed thereto by each of the members of such
organization, and to collect income therefrom and turn
over the entire amount thereof, less expenses, to such
members,
(2) organized and controlled by one or more such
members, and
(3) comprised solely of members that are
organizations described in clause (ii) or (iv) of
section 170(b)(1)(A)--
(A) which are exempt from taxation under
subsection (a), or
(B) the income of which is excluded from
taxation under section 115(a),
then such organization shall be treated as an
organization organized and operated exclusively for
charitable purposes.
(g) Definition of agricultural.--For purposes of subsection
(c)(5), the term ``agricultural'' includes the art or science
of cultivating land, harvesting crops or aquatic resources, or
raising livestock.
(h) Expenditures by public charities to influence
legislation.--
(1) General rule.--In the case of an organization to
which this subsection applies, exemption from taxation
under subsection (a) shall be denied because a
substantial part of the activities of such organization
consists of carrying on propaganda, or otherwise
attempting, to influence legislation, but only if such
organization normally--
(A) makes lobbying expenditures in excess of
the lobbying ceiling amount for such
organization for each taxable year, or
(B) makes grass roots expenditures in excess
of the grass roots ceiling amount for such
organization for each taxable year.
(2) Definitions.--For purposes of this subsection--
(A) Lobbying expenditures.--The term
``lobbying expenditures'' means expenditures
for the purpose of influencing legislation (as
defined in section 4911(d)).
(B) Lobbying ceiling amount.--The lobbying
ceiling amount for any organization for any
taxable year is 150 percent of the lobbying
nontaxable amount for such organization for
such taxable year, determined under section
4911.
(C) Grass roots expenditures.--The term
``grass roots expenditures'' means expenditures
for the purpose of influencing legislation (as
defined in section 4911(d) without regard to
paragraph (1)(B) thereof).
(D) Grass roots ceiling amount.--The grass
roots ceiling amount for any organization for
any taxable year is 150 percent of the grass
roots nontaxable amount for such organization
for such taxable year, determined under section
4911.
(3) Organizations to which this subsection applies.--
This subsection shall apply to any organization which
has elected (in such manner and at such time as the
Secretary may prescribe) to have the provisions of this
subsection apply to such organization and which, for
the taxable year which includes the date the election
is made, is described in subsection (c)(3) and--
(A) is described in paragraph (4), and
(B) is not a disqualified organization under
paragraph (5).
(4) Organizations permitted to elect to have this
subsection apply.--An organization is described in this
paragraph if it is described in--
(A) section 170(b)(1)(A)(ii) (relating to
educational institutions),
(B) section 170(b)(1)(A)(iii) (relating to
hospitals and medical research organizations),
(C) section 170(b)(1)(A)(iv) (relating to
organizations supporting government schools),
(D) section 170(b)(1)(A)(vi) (relating to
organizations publicly supported by charitable
contributions),
(E) section 170(b)(1)(A)(ix) (relating to
agricultural research organizations),
(F) section 509(a)(2) (relating to
organizations publicly supported by admissions,
sales, etc.), or
(G) section 509(a)(3) (relating to
organizations supporting certain types of
public charities) except that for purposes of
this subparagraph, section 509(a)(3) shall be
applied without regard to the last sentence of
section 509(a).
(5) Disqualified organizations.--For purposes of
paragraph (3) an organization is a disqualified
organization if it is--
(A) described in section 170(b)(1)(A)(i)
(relating to churches),
(B) an integrated auxiliary of a church or of
a convention or association of churches, or
(C) a member of an affiliated group of
organizations (within the meaning of section
4911(f)(2)) if one or more members of such
group is described in subparagraph (A) or (B).
(6) Years for which election is effective.--An
election by an organization under this subsection shall
be effective for all taxable years of such organization
which--
(A) end after the date the election is made,
and
(B) begin before the date the election is
revoked by such organization (under regulations
prescribed by the Secretary).
(7) No effect on certain organizations.--With respect
to any organization for a taxable year for which--
(A) such organization is a disqualified
organization (within the meaning of paragraph
(5)), or
(B) an election under this subsection is not
in effect for such organization,
nothing in this subsection or in section 4911 shall be
construed to affect the interpretation of the phrase,
``no substantial part of the activities of which is
carrying on propaganda, or otherwise attempting, to
influence legislation,'' under subsection (c)(3).
(8) Affiliated organizations.--For rules regarding
affiliated organizations, see section 4911(f).
(i) Prohibition of discrimination by certain social clubs.--
Notwithstanding subsection (a), an organization which is
described in subsection (c)(7) shall not be exempt from
taxation under subsection (a) for any taxable year if, at any
time during such taxable year, the charter, bylaws, or other
governing instrument, of such organization or any written
policy statement of such organization contains a provision
which provides for discrimination against any person on the
basis of race, color, or religion. The preceding sentence to
the extent it relates to discrimination on the basis of
religion shall not apply to--
(1) an auxiliary of a fraternal beneficiary society
if such society--
(A) is described in subsection (c)(8) and
exempt from tax under subsection (a), and
(B) limits its membership to the members of a
particular religion, or
(2) a club which in good faith limits its membership
to the members of a particular religion in order to
further the teachings or principles of that religion,
and not to exclude individuals of a particular race or
color.
(j) Special rules for certain amateur sports organizations.--
(1) In general.--In the case of a qualified amateur
sports organization--
(A) the requirement of subsection (c)(3) that
no part of its activities involve the provision
of athletic facilities or equipment shall not
apply, and
(B) such organization shall not fail to meet
the requirements of subsection (c)(3) merely
because its membership is local or regional in
nature.
(2) Qualified amateur sports organization defined.--
For purposes of this subsection, the term ``qualified
amateur sports organization'' means any organization
organized and operated exclusively to foster national
or international amateur sports competition if such
organization is also organized and operated primarily
to conduct national or international competition in
sports or to support and develop amateur athletes for
national or international competition in sports.
(k) Treatment of certain organizations providing child
care.--For purposes of subsection (c)(3) of this section and
sections 170(c)(2), 2055(a)(2), and 2522(a)(2), the term
``educational purposes'' includes the providing of care of
children away from their homes if--
(1) substantially all of the care provided by the
organization is for purposes of enabling individuals to
be gainfully employed, and
(2) the services provided by the organization are
available to the general public.
(l) Government corporations exempt under subsection (c)(1).--
For purposes of subsection (c)(1), the following organizations
are described in this subsection:
(1) The Central Liquidity Facility established under
title III of the Federal Credit Union Act (12 U.S.C.
1795 et seq.).
(2) The Resolution Trust Corporation established
under section 21A?1 of the Federal Home Loan
Bank Act.
(3) The Resolution Funding Corporation established
under section 21B of the Federal Home Loan Bank Act.
(4) The Patient-Centered Outcomes Research Institute
established under section 1181(b) of the Social
Security Act.
(m) Certain organizations providing commercial-type insurance
not exempt from tax.--
(1) Denial of tax exemption where providing
commercial-type insurance is substantial part of
activities.--An organization described in paragraph (3)
or (4) of subsection (c) shall be exempt from tax under
subsection (a) only if no substantial part of its
activities consists of providing commercial-type
insurance.
(2) Other organizations taxed as insurance companies
on insurance business.--In the case of an organization
described in paragraph (3) or (4) of subsection (c)
which is exempt from tax under subsection (a) after the
application of paragraph (1) of this subsection--
(A) the activity of providing commercial-type
insurance shall be treated as an unrelated
trade or business (as defined in section 513),
and
(B) in lieu of the tax imposed by section 511
with respect to such activity, such
organization shall be treated as an insurance
company for purposes of applying subchapter L
with respect to such activity.
(3) Commercial-type insurance.--For purposes of this
subsection, the term ``commercial-type insurance''
shall not include--
(A) insurance provided at substantially below
cost to a class of charitable recipients,
(B) incidental health insurance provided by a
health maintenance organization of a kind
customarily provided by such organizations,
(C) property or casualty insurance provided
(directly or through an organization described
in section 414(e)(3)(B)(ii)) by a church or
convention or association of churches for such
church or convention or association of
churches,
(D) providing retirement or welfare benefits
(or both) by a church or a convention or
association of churches (directly or through an
organization described in section 414(e)(3)(A)
or 414(e)(3)(B)(ii)) for the employees
(including employees described in section
414(e)(3)(B)) of such church or convention or
association of churches or the beneficiaries of
such employees, and
(E) charitable gift annuities.
(4) Insurance includes annuities.--For purposes of
this subsection, the issuance of annuity contracts
shall be treated as providing insurance.
(5) Charitable gift annuity.--For purposes of
paragraph (3)(E), the term ``charitable gift annuity''
means an annuity if--
(A) a portion of the amount paid in
connection with the issuance of the annuity is
allowable as a deduction under section 170 or
2055, and
(B) the annuity is described in section
514(c)(5) (determined as if any amount paid in
cash in connection with such issuance were
property).
(n) Charitable risk pools.--
(1) In general.--For purposes of this title--
(A) a qualified charitable risk pool shall be
treated as an organization organized and
operated exclusively for charitable purposes,
and
(B) subsection (m) shall not apply to a
qualified charitable risk pool.
(2) Qualified charitable risk pool.--For purposes of
this subsection, the term ``qualified charitable risk
pool'' means any organization--
(A) which is organized and operated solely to
pool insurable risks of its members (other than
risks related to medical malpractice) and to
provide information to its members with respect
to loss control and risk management,
(B) which is comprised solely of members that
are organizations described in subsection
(c)(3) and exempt from tax under subsection
(a), and
(C) which meets the organizational
requirements of paragraph (3).
(3) Organizational requirements.--An organization
(hereinafter in this subsection referred to as the
``risk pool'') meets the organizational requirements of
this paragraph if--
(A) such risk pool is organized as a
nonprofit organization under State law
provisions authorizing risk pooling
arrangements for charitable organizations,
(B) such risk pool is exempt from any income
tax imposed by the State (or will be so exempt
after such pool qualifies as an organization
exempt from tax under this title),
(C) such risk pool has obtained at least
$1,000,000 in startup capital from nonmember
charitable organizations,
(D) such risk pool is controlled by a board
of directors elected by its members, and
(E) the organizational documents of such risk
pool require that--
(i) each member of such pool shall at
all times be an organization described
in subsection (c)(3) and exempt from
tax under subsection (a),
(ii) any member which receives a
final determination that it no longer
qualifies as an organization described
in subsection (c)(3) shall immediately
notify the pool of such determination
and the effective date of such
determination, and
(iii) each policy of insurance issued
by the risk pool shall provide that
such policy will not cover the insured
with respect to events occurring after
the date such final determination was
issued to the insured.
An organization shall not cease to qualify as a
qualified charitable risk pool solely by reason of the
failure of any of its members to continue to be an
organization described in subsection (c)(3) if, within
a reasonable period of time after such pool is notified
as required under subparagraph (E)(ii), such pool takes
such action as may be reasonably necessary to remove
such member from such pool.
(4) Other definitions.--For purposes of this
subsection--
(A) Startup capital.--The term ``startup
capital'' means any capital contributed to, and
any program-related investments (within the
meaning of section 4944(c)) made in, the risk
pool before such pool commences operations.
(B) Nonmember charitable organization.--The
term ``nonmember charitable organization''
means any organization which is described in
subsection (c)(3) and exempt from tax under
subsection (a) and which is not a member of the
risk pool and does not benefit (directly or
indirectly) from the insurance coverage
provided by the pool to its members.
(o) Treatment of hospitals participating in provider-
sponsored organizations.--An organization shall not fail to be
treated as organized and operated exclusively for a charitable
purpose for purposes of subsection (c)(3) solely because a
hospital which is owned and operated by such organization
participates in a provider-sponsored organization (as defined
in section 1855(d) of the Social Security Act), whether or not
the provider-sponsored organization is exempt from tax. For
purposes of subsection (c)(3), any person with a material
financial interest in such a provider-sponsored organization
shall be treated as a private shareholder or individual with
respect to the hospital.
(p) Suspension of tax-exempt status of terrorist
organizations.--
(1) In general.--The exemption from tax under
subsection (a) with respect to any organization
described in paragraph (2), and the eligibility of any
organization described in paragraph (2) to apply for
recognition of exemption under subsection (a), shall be
suspended during the period described in paragraph (3).
(2) Terrorist organizations.--An organization is
described in this paragraph if such organization is
designated or otherwise individually identified--
(A) under section 212(a)(3)(B)(vi)(II) or 219
of the Immigration and Nationality Act as a
terrorist organization or foreign terrorist
organization,
(B) in or pursuant to an Executive order
which is related to terrorism and issued under
the authority of the International Emergency
Economic Powers Act or section 5 of the United
Nations Participation Act of 1945 for the
purpose of imposing on such organization an
economic or other sanction, or
(C) in or pursuant to an Executive order
issued under the authority of any Federal law
if--
(i) the organization is designated or
otherwise individually identified in or
pursuant to such Executive order as
supporting or engaging in terrorist
activity (as defined in section
212(a)(3)(B) of the Immigration and
Nationality Act) or supporting
terrorism (as defined in section
140(d)(2) of the Foreign Relations
Authorization Act, Fiscal Years 1988
and 1989); and
(ii) such Executive order refers to
this subsection.
(3) Period of suspension.--With respect to any
organization described in paragraph (2), the period of
suspension--
(A) begins on the later of--
(i) the date of the first publication
of a designation or identification
described in paragraph (2) with respect
to such organization, or
(ii) the date of the enactment of
this subsection, and
(B) ends on the first date that all
designations and identifications described in
paragraph (2) with respect to such organization
are rescinded pursuant to the law or Executive
order under which such designation or
identification was made.
(4) Denial of deduction.--No deduction shall be
allowed under any provision of this title, including
sections 170, 545(b)(2), 556(b)(2),1 642(c),
2055, 2106(a)(2), and 2522, with respect to any
contribution to an organization described in paragraph
(2) during the period described in paragraph (3).
(5) Denial of administrative or judicial challenge of
suspension or denial of deduction.--Notwithstanding
section 7428 or any other provision of law, no
organization or other person may challenge a suspension
under paragraph (1), a designation or identification
described in paragraph (2), the period of suspension
described in paragraph (3), or a denial of a deduction
under paragraph (4) in any administrative or judicial
proceeding relating to the Federal tax liability of
such organization or other person.
(6) Erroneous designation.--
(A) In general.--If--
(i) the tax exemption of any
organization described in paragraph (2)
is suspended under paragraph (1),
(ii) each designation and
identification described in paragraph
(2) which has been made with respect to
such organization is determined to be
erroneous pursuant to the law or
Executive order under which such
designation or identification was made,
and
(iii) the erroneous designations and
identifications result in an
overpayment of income tax for any
taxable year by such organization,
credit or refund (with interest) with respect
to such overpayment shall be made.
(B) Waiver of limitations.--If the credit or
refund of any overpayment of tax described in
subparagraph (A)(iii) is prevented at any time
by the operation of any law or rule of law
(including res judicata), such credit or refund
may nevertheless be allowed or made if the
claim therefor is filed before the close of the
1-year period beginning on the date of the last
determination described in subparagraph
(A)(ii).
(7) Notice of suspensions.--If the tax exemption of
any organization is suspended under this subsection,
the Internal Revenue Service shall update the listings
of tax-exempt organizations and shall publish
appropriate notice to taxpayers of such suspension and
of the fact that contributions to such organization are
not deductible during the period of such suspension.
(q) Special rules for credit counseling organizations.--
(1) In general.--An organization with respect to
which the provision of credit counseling services is a
substantial purpose shall not be exempt from tax under
subsection (a) unless such organization is described in
paragraph (3) or (4) of subsection (c) and such
organization is organized and operated in accordance
with the following requirements:
(A) The organization--
(i) provides credit counseling
services tailored to the specific needs
and circumstances of consumers,
(ii) makes no loans to debtors (other
than loans with no fees or interest)
and does not negotiate the making of
loans on behalf of debtors,
(iii) provides services for the
purpose of improving a consumer's
credit record, credit history, or
credit rating only to the extent that
such services are incidental to
providing credit counseling services,
and
(iv) does not charge any separately
stated fee for services for the purpose
of improving any consumer's credit
record, credit history, or credit
rating.
(B) The organization does not refuse to
provide credit counseling services to a
consumer due to the inability of the consumer
to pay, the ineligibility of the consumer for
debt management plan enrollment, or the
unwillingness of the consumer to enroll in a
debt management plan.
(C) The organization establishes and
implements a fee policy which--
(i) requires that any fees charged to
a consumer for services are reasonable,
(ii) allows for the waiver of fees if
the consumer is unable to pay, and
(iii) except to the extent allowed by
State law, prohibits charging any fee
based in whole or in part on a
percentage of the consumer's debt, the
consumer's payments to be made pursuant
to a debt management plan, or the
projected or actual savings to the
consumer resulting from enrolling in a
debt management plan.
(D) At all times the organization has a board
of directors or other governing body--
(i) which is controlled by persons
who represent the broad interests of
the public, such as public officials
acting in their capacities as such,
persons having special knowledge or
expertise in credit or financial
education, and community leaders,
(ii) not more than 20 percent of the
voting power of which is vested in
persons who are employed by the
organization or who will benefit
financially, directly or indirectly,
from the organization's activities
(other than through the receipt of
reasonable directors' fees or the
repayment of consumer debt to creditors
other than the credit counseling
organization or its affiliates), and
(iii) not more than 49 percent of the
voting power of which is vested in
persons who are employed by the
organization or who will benefit
financially, directly or indirectly,
from the organization's activities
(other than through the receipt of
reasonable directors' fees).
(E) The organization does not own more than
35 percent of--
(i) the total combined voting power
of any corporation (other than a
corporation which is an organization
described in subsection (c)(3) and
exempt from tax under subsection (a))
which is in the trade or business of
lending money, repairing credit, or
providing debt management plan
services, payment processing, or
similar services,
(ii) the profits interest of any
partnership (other than a partnership
which is an organization described in
subsection (c)(3) and exempt from tax
under subsection (a)) which is in the
trade or business of lending money,
repairing credit, or providing debt
management plan services, payment
processing, or similar services, and
(iii) the beneficial interest of any
trust or estate (other than a trust
which is an organization described in
subsection (c)(3) and exempt from tax
under subsection (a)) which is in the
trade or business of lending money,
repairing credit, or providing debt
management plan services, payment
processing, or similar services.
(F) The organization receives no amount for
providing referrals to others for debt
management plan services, and pays no amount to
others for obtaining referrals of consumers.
(2) Additional requirements for organizations
described in subsection (c)(3).--
(A) In general.--In addition to the
requirements under paragraph (1), an
organization with respect to which the
provision of credit counseling services is a
substantial purpose and which is described in
paragraph (3) of subsection (c) shall not be
exempt from tax under subsection (a) unless
such organization is organized and operated in
accordance with the following requirements:
(i) The organization does not solicit
contributions from consumers during the
initial counseling process or while the
consumer is receiving services from the
organization.
(ii) The aggregate revenues of the
organization which are from payments of
creditors of consumers of the
organization and which are attributable
to debt management plan services do not
exceed the applicable percentage of the
total revenues of the organization.
(B) Applicable percentage.--
(i) In general.--For purposes of
subparagraph (A)(ii), the applicable
percentage is 50 percent.
(ii) Transition rule.--
Notwithstanding clause (i), in the case
of an organization with respect to
which the provision of credit
counseling services is a substantial
purpose and which is described in
paragraph (3) of subsection (c) and
exempt from tax under subsection (a) on
the date of the enactment of this
subsection, the applicable percentage
is--
(I) 80 percent for the first
taxable year of such
organization beginning after
the date which is 1 year after
the date of the enactment of
this subsection, and
(II) 70 percent for the
second such taxable year
beginning after such date, and
(III) 60 percent for the
third such taxable year
beginning after such date.
(3) Additional requirement for organizations
described in subsection (c)(4).--In addition to the
requirements under paragraph (1), an organization with
respect to which the provision of credit counseling
services is a substantial purpose and which is
described in paragraph (4) of subsection (c) shall not
be exempt from tax under subsection (a) unless such
organization notifies the Secretary, in such manner as
the Secretary may by regulations prescribe, that it is
applying for recognition as a credit counseling
organization.
(4) Credit counseling services; debt management plan
services.--For purposes of this subsection--
(A) Credit counseling services.--The term
``credit counseling services'' means--
(i) the providing of educational
information to the general public on
budgeting, personal finance, financial
literacy, saving and spending
practices, and the sound use of
consumer credit,
(ii) the assisting of individuals and
families with financial problems by
providing them with counseling, or
(iii) a combination of the activities
described in clauses (i) and (ii).
(B) Debt management plan services.--The term
``debt management plan services'' means
services related to the repayment,
consolidation, or restructuring of a consumer's
debt, and includes the negotiation with
creditors of lower interest rates, the waiver
or reduction of fees, and the marketing and
processing of debt management plans.
(r) Additional requirements for certain hospitals.--
(1) In general.--A hospital organization to which
this subsection applies shall not be treated as
described in subsection (c)(3) unless the
organization--
(A) meets the community health needs
assessment requirements described in paragraph
(3),
(B) meets the financial assistance policy
requirements described in paragraph (4),
(C) meets the requirements on charges
described in paragraph (5), and
(D) meets the billing and collection
requirement described in paragraph (6).
(2) Hospital organizations to which subsection
applies.--
(A) In general.--This subsection shall apply
to--
(i) an organization which operates a
facility which is required by a State
to be licensed, registered, or
similarly recognized as a hospital, and
(ii) any other organization which the
Secretary determines has the provision
of hospital care as its principal
function or purpose constituting the
basis for its exemption under
subsection (c)(3) (determined without
regard to this subsection).
(B) Organizations with more than 1 hospital
facility.--If a hospital organization operates
more than 1 hospital facility--
(i) the organization shall meet the
requirements of this subsection
separately with respect to each such
facility, and
(ii) the organization shall not be
treated as described in subsection
(c)(3) with respect to any such
facility for which such requirements
are not separately met.
(3) Community health needs assessments.--
(A) In general.--An organization meets the
requirements of this paragraph with respect to
any taxable year only if the organization--
(i) has conducted a community health
needs assessment which meets the
requirements of subparagraph (B) in
such taxable year or in either of the 2
taxable years immediately preceding
such taxable year, and
(ii) has adopted an implementation
strategy to meet the community health
needs identified through such
assessment.
(B) Community health needs assessment.--A
community health needs assessment meets the
requirements of this paragraph if such
community health needs assessment--
(i) takes into account input from
persons who represent the broad
interests of the community served by
the hospital facility, including those
with special knowledge of or expertise
in public health, and
(ii) is made widely available to the
public.
(4) Financial assistance policy.--An organization
meets the requirements of this paragraph if the
organization establishes the following policies:
(A) Financial assistance policy.--A written
financial assistance policy which includes--
(i) eligibility criteria for
financial assistance, and whether such
assistance includes free or discounted
care,
(ii) the basis for calculating
amounts charged to patients,
(iii) the method for applying for
financial assistance,
(iv) in the case of an organization
which does not have a separate billing
and collections policy, the actions the
organization may take in the event of
non-payment, including collections
action and reporting to credit
agencies, and
(v) measures to widely publicize the
policy within the community to be
served by the organization.
(B) Policy relating to emergency medical
care.--A written policy requiring the
organization to provide, without
discrimination, care for emergency medical
conditions (within the meaning of section 1867
of the Social Security Act (42 U.S.C. 1395dd))
to individuals regardless of their eligibility
under the financial assistance policy described
in subparagraph (A).
(5) Limitation on charges.--An organization meets the
requirements of this paragraph if the organization--
(A) limits amounts charged for emergency or
other medically necessary care provided to
individuals eligible for assistance under the
financial assistance policy described in
paragraph (4)(A) to not more than the amounts
generally billed to individuals who have
insurance covering such care, and
(B) prohibits the use of gross charges.
(6) Billing and collection requirements.--An
organization meets the requirement of this paragraph
only if the organization does not engage in
extraordinary collection actions before the
organization has made reasonable efforts to determine
whether the individual is eligible for assistance under
the financial assistance policy described in paragraph
(4)(A).
(7) Regulatory authority.--The Secretary shall issue
such regulations and guidance as may be necessary to
carry out the provisions of this subsection, including
guidance relating to what constitutes reasonable
efforts to determine the eligibility of a patient under
a financial assistance policy for purposes of paragraph
(6).
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