[House Report 114-350]
[From the U.S. Government Publishing Office]
114th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 114-350
======================================================================
TO AMEND TITLE 36, UNITED STATES CODE, TO MAKE CERTAIN IMPROVEMENTS IN
THE CONGRESSIONAL CHARTER OF THE DISABLED AMERICAN VETERANS
_______
November 30, 2015.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Goodlatte, from the Committee on the Judiciary, submitted the
following
R E P O R T
[To accompany H.R. 1755]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 1755) to amend title 36, United States Code, to make
certain improvements in the congressional charter of the
Disabled American Veterans, having considered the same, reports
favorably thereon without amendment and recommends that the
bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 1
Background and Need for the Legislation.......................... 2
Hearings......................................................... 4
Committee Consideration.......................................... 4
Committee Votes.................................................. 4
Committee Oversight Findings..................................... 4
New Budget Authority and Tax Expenditures........................ 5
Congressional Budget Office Cost Estimate........................ 5
Duplication of Federal Programs.................................. 6
Disclosure of Directed Rule Makings.............................. 6
Performance Goals and Objectives................................. 6
Advisory on Earmarks............................................. 6
Section-by-Section Analysis...................................... 6
Changes in Existing Law Made by the Bill, as Reported............ 7
Purpose and Summary
H.R. 1755 makes changes to the Federal charter of Disabled
American Veterans to better reflect its mission.
Background and Need for the Legislation
Disabled American Veterans (``DAV'') was established in
1920 and received a Federal charter in 1932.\1\ Its purposes
are:
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\1\See 36 U.S.C. sec. 50301 & DAV website.
1) Lto uphold and maintain the Constitution and laws of
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the United States;
2) Lto realize the true American ideals and aims for
which those eligible to membership fought;
3) Lto advance the interests, and work for the
betterment, of all wounded, injured, and disabled
American veterans;
4) Lto cooperate with the Department of Veterans
Affairs and all other public and private agencies
devoted to the cause of improving and advancing the
condition, health, and interests of all wounded,
injured, and disabled veterans;
5) Lto stimulate a feeling of mutual devotion,
helpfulness, and comradeship among all wounded,
injured, and disabled veterans;
6) Lto serve our comrades, our communities, and our
country, and
7) Lto encourage in all people that spirit of
understanding which will guard against future wars.\2\
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\2\36 U.S.C. sec. 50302.
DAV has over 1.2 million members, with membership open to a
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person who:
was wounded, gassed, injured, or disabled in the line
of duty during time of war while in the service of the
military or naval forces of the United States; and . .
. was honorably discharged or separated from that
service or is still in active service in the Armed
Forces of the United States or . . . was disabled while
serving with any of the Armed Forces of a country
associated with the United States as an ally during any
of its war periods . . . is a citizen of the United
States; and . . . was honorably discharged.\3\
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\3\36 U.S.C. sec. 50303 & DAV website.
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The mission statement of DAV states that:
We are dedicated to a single purpose: empowering
veterans to lead high-quality lives with respect and
dignity. We accomplish this by ensuring that veterans
and their families can access the full range of
benefits available to them; fighting for the interests
of America's injured heroes on Capitol Hill; and
educating the public about the great sacrifices and
needs of veterans transitioning back to civilian life.
LProviding free, professional assistance to
veterans and their families in obtaining benefits and
services earned through military service and provided
by the Department of Veterans Affairs (VA) and other
agencies of government.
LProviding outreach concerning its program
services to the American people generally, and to
disabled veterans and their families specifically.
LRepresenting the interests of disabled
veterans, their families, their widowed spouses and
their orphans before Congress, the White House and the
Judicial Branch, as well as state and local government.
LExtending DAV's mission of hope into the
communities where these veterans and their families
live through a network of state-level Departments and
local Chapters.
LProviding a structure through which disabled
veterans can express their compassion for their fellow
veterans through a variety of volunteer programs.\4\
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\4\DAV website.
DAV sent a letter to the Committee requesting a change in
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its Federal charter:
For decades, DAV has been exempt from Federal taxation
under Section 501(c)(4) of the Internal Revenue Code\5\
and its predecessor sections. This designation applies
to ``social welfare organizations.'' Donations to most
501(c)(4) organizations are not deductible for income
or estate tax purposes. DAV is a rare exception, as it
qualifies to receive deductible contributions as a
``war veterans'' organization.\6\
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\5\Organizations are exempt from Federal corporate and certain
other taxes if they are ``[c]ivic 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 [so
long as] no part of the net earnings of such entity inures to the
benefit of any private shareholder or individual.'' 26 U.S.C. sec.
501(c)(4).
See 26 U.S.C. sec. 501(c)(4).
\6\26 U.S.C. sec. 170(c)(3) provides that deductible charitable
contributions can be made to ``[a] post or organization of war
veterans, or an auxiliary unit or society of, or trust or foundation
for, any such post or organization--(A) organized in the United States
or any of its possessions, and (B) no part of the net earnings of which
inures to the benefit of any private shareholder or individual.'' In
addition, 26 U.S.C. sec. 2055(a)(4) provides that bequests, legacies,
devises and transfers ``to or for the use of any veterans' organization
incorporated by Act of Congress, or of its departments or local
chapters or posts, no part of the net earnings of which inures to the
benefit of any private shareholder or individual. . . .'' are not
subject to the Federal estate tax.
Many donors, even sophisticated donors, believe
incorrectly that charitable deductions are available
only for gifts made to a 501(c)(3) organization,\7\
more commonly known as a ``public charity.'' We believe
that this misconception has been limiting DAV's
opportunities to gain corporate support and major
gifts, including bequests.
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\7\Organizations are exempt from Federal corporate and certain
other taxes if they are ``[c]orporations[ or] 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 . . . 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.'' 26 U.S.C. sec.
501(c)(3).
There is no doubt that DAV's activities of service to
wounded and disabled veterans would enable it to
qualify as a public charity, exempt from taxation under
Section 501(c)(3) of the Internal Revenue Code. To
achieve that designation, the organization needs to
make application to the Internal Revenue Service. The
application requires that certain language be included
in the ``organizing document,'' which in our case is
the Federal charter.\8\
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\8\Part III of the Internal Revenue Service's Form 1023
(Application for Recognition of Exemption Under Section 501(c)(3) of
the Internal Revenue Code) states that ``[s]ection 501(c)(3) requires
that your organizing document state your exempt purpose(s), such as
charitable, religious, educational, and/or scientific purposes. Check
the box to confirm that your organizing document meets this
requirement. Describe specifically where your organizing document meets
this requirement, such as a reference to a particular article or
section in your organizing document. Refer to the instructions for
exempt purpose language. Location of Purpose Clause (Page, Article, and
Paragraph):_____'' It also states that ``[s]ection 501(c)(3) requires
that upon dissolution of your organization, your remaining assets must
be used exclusively for exempt purposes, such as charitable, religious,
educational, and/or scientific purposes. Check the box on line 2a to
confirm that your organizing document meets this requirement by express
provision for the distribution of assets upon dissolution. If you rely
on state law for your dissolution provision, do not check the box on
line 2a and go to line 2c. If you checked the box on line 2a, specify
the location of your dissolution clause (Page, Article, and
Paragraph)._____''
Specifically, the requested amendments make explicit
DAV's exclusively charitable purpose, explain the
educational component of its mission and mandate the
assignment of its assets to the Department of Veterans
Affairs in the event of dissolution. Inclusion of these
provisions in the charter will simplify greatly our
conversion to (c)(3) status.\9\
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\9\Letter from J. Marc Burgess, National Adjutant, DAV, to the
Judiciary Committee, July 10, 2015.
Hearings
The Committee on the Judiciary held no hearings on H.R.
1755.
Committee Consideration
On September 17, 2015, the Committee met in open session
and ordered the bill H.R. 1755 favorably reported without
amendment, by a voice vote, a quorum being present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that there
were no recorded votes during the Committee's consideration of
H.R. 1755.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 1755, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, November 23, 2015.
Hon. Bob Goodlatte, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1755, a bill to
amend title 36, United States Code, to make certain
improvements in the congressional charter of the Disabled
American Veterans.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Dwayne M.
Wright, who can be reached at 226-2840.
Sincerely,
Keith Hall,
Director.
Enclosure
cc:
Honorable John Conyers, Jr.
Ranking Member
H.R. 1755--a bill to amend title 36, United States Code, to make
certain improvements in the congressional charter of the Disabled
American Veterans.
As ordered reported by the House Committee on the Judiciary
on September 17, 2015.
H.R. 1755 would amend the charter of the Disabled American
Veterans (DAV) to specify that DAV is organized for charitable
and educational purposes, and to ensure that upon dissolution
of the organization any remaining assets would be transferred
to the Department of Veterans Affairs. Those changes could
allow DAV to qualify as a ``public charity'' under the Internal
Revenue Code, and thus might lead to an increase in tax
deductible donations. However, because DAV is already exempt
from Federal taxation and qualified to receive deductible
contributions as a ``war veterans'' organization, CBO and the
staff of the Joint Committee on Taxation expect that such
changes would have a negligible effect on Federal revenues.
Enacting H.R. 1755 would not affect direct spending, but
would have a negligible effect on revenues; therefore, pay-as-
you-go procedures apply. CBO estimates that enacting H.R. 1755
would not increase net direct spending or on-budget deficits by
more than $5 billion in any of the four consecutive 10-year
periods beginning in 2026.
H.R. 1755 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of State, local, or tribal
governments.
The CBO staff contact for this estimate is Dwayne M.
Wright. The estimate was approved by H. Samuel Papenfuss,
Deputy Assistant Director for Budget Analysis.
Duplication of Federal Programs
No provision of H.R. 1755 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The Committee estimates that H.R. 1755 specifically directs
to be completed no specific rule makings within the meaning of
5 U.S.C. 551.
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, H.R.
1755 makes changes to the Federal charter of Disabled American
Veterans to better reflect its mission.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 1755 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.
Section-by-Section Analysis
The following discussion describes the bill as reported by
the Committee.
Sec. 1. Congressional Charter of Disabled American Veterans
Subsection (a) amends 36 U.S.C. section 50302 by stating
that DAV is organized exclusively for charitable and
educational purposes and by adding two new purposes of the
organization--1) to educate the public about the sacrifices and
needs of disabled veterans, and 2) to educate disabled veterans
about the benefits and resources available to them.
Subsection (b) adds section 50309 to title 36 providing
that on dissolution or final liquidation of DAV, any assets
remaining after the discharge or satisfactory provision for the
discharge of all liabilities shall be transferred to the
Secretary of Veterans Affairs for the care of disabled
veterans.
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):
TITLE 36, UNITED STATES CODE
* * * * * * *
SUBTITLE II--PATRIOTIC AND NATIONAL ORGANIZATIONS
* * * * * * *
PART B--ORGANIZATIONS
* * * * * * *
CHAPTER 503--DISABLED AMERICAN VETERANS
* * * * * * *
Sec. 50302. Purposes
[The purposes of the corporation are] The corporation is
organized exclusively for charitable and educational purposes.
The purposes of the corporation shall include----
(1) to uphold and maintain the Constitution and
laws of the United States;
(2) to realize the true American ideals and aims
for which those eligible to membership fought;
(3) to advance the interests, and work for the
betterment, of all wounded, injured, and disabled
American veterans;
(4) to cooperate with the Department of Veterans
Affairs and all other public and private agencies
devoted to the cause of improving and advancing the
condition, health, and interests of all wounded,
injured, and disabled veterans;
(5) to stimulate a feeling of mutual devotion,
helpfulness, and comradeship among all wounded,
injured, and disabled veterans;
(6) to serve our comrades, our communities, and our
country; [and]
(7) to educate the public about the sacrifices and
needs of disabled veterans;
(8) to educate disabled veterans about the benefits
and resources available to them; and
[(7)] (9) to encourage in all people that spirit of
understanding which will guard against future wars.
* * * * * * *
Sec. 50309. Dissolution
On dissolution or final liquidation of the corporation, any
assets remaining after the discharge or satisfactory provision
for the discharge of all liabilities shall be transferred to
the Secretary of Veterans Affairs for the care of disabled
veterans.
* * * * * * *
[all]