Pension Protection Act of 2006

PENSION PROTECTION ACT OF 2006 -- (Senate - August 03, 2006)

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Mr. GRASSLEY. Mr. President, I am happy to engage my distinguished colleague about what the intent with this exemption is, and how we have worked to limit the unintended consequences for legitimate charitable organizations. As you are aware, some of us with interest in this provision in working to address any unintended consequences thought it would be a good idea to give the Secretary the ability to exempt from the excess business holdings rules Type III supporting organizations in certain limited circumstances.

Mr. ALLARD. Mr. President, specifically, I want to draw the chairman's attention to the excess business holdings provision and the language that allows the Secretary to waive the application of the excess business holdings provisions if the holdings of the Type III supporting organization are held consistent with the purpose or function constituting the basis for its exemption under section 501. I want to emphasize that my understanding is correct that the Secretary should make a final determination very quickly after a currently existing Type III supporting organization seeks exemption from the excess business holdings rules. It is extremely important that the determination be made within 6 months after the organization seeks exemption so that the organization knows how it must structure its holdings. Is that my friend's understanding?

Mr. GRASSLEY. Mr. President, I agree with Senator Allard on his understanding and our intent that the Secretary should make a final determination very quickly after a currently existing Type III supporting organization seeks exemption from the excess business holdings rules. The determination should be made by the Secretary within 6 months after the exemption is sought. The joint committee will have a description of several factors that the Secretary should consider in making decisions to waive. The considered views of the State Attorney General should be a part of that decision. In addition, if the shares of the entity and related persons is not controlling or the individual and related persons are bound to ultimately contribute all but a de minimus share to the charity and have no direct or indirect control of that charity and its investments those are additional factors the Secretary can consider.

Mr. ALLARD. I commend the chairman for his work and for working with others, such as the distinguished ranking member on the Senate Finance Committee, Senator Baucus, and Senator Santorum on this much needed exemption. There is no question that we intend to encourage more charitable giving in this country. I thank my colleague for engaging me in this colloquy.

Mr. President, I yield the floor.

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Mr. COLEMAN. One provision of Section 1220 of the Pension Protection Act of 2006 would create a new Section 501 (q)(2)(A)(ii) of the Internal Revenue Code. This particular subsection contains one of several new requirements for credit counseling organizations to qualify for Federal tax exemption under Internal Revenue Code Section 501(c)(3). I wanted to clarify with the chairman that this particular provision is not intended to impose a limitation on all credit counseling organization revenues derived from debt management plans, but rather only on the revenues derived from what are commonly referred to as ``fair share'' payments from creditors to credit counseling agencies. These are payments made by creditors to credit counseling organizations that are attributable to the debt management plan services provided by credit counseling organizations to consumers whose debt is being repaid to the creditors. If the limitation were intended to include both ``fair share'' revenues paid by creditors and revenues received in the form of debt management plan fees paid by consumers, then virtually no existing credit counseling organizations, if any, would be able to qualify for tax-exempt status under Internal Revenue Code Section 501(c)(3). That is not the intent of Congress.

Mr. GRASSLEY. Mr. President, yes, the provision is intended to get at fair share type payments, but note that agencies and creditors cannot get around the provision merely by re-labeling fair share payments as something else. This is the intent of this provision. I am also aware of a specific issue affecting a few States and their existing State law, and the provision before us today specifically includes a transition period in part to allow the reconciliation of various State statutes with the new federal provision. I will work with interested Senators during this period on their concerns regarding existing organizations. I thank Mr. Coleman and Mr. Sessions for helping to clarify its intent.

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Mr. GRASSLEY. Mr. President, I appreciate my distinguished colleague from Virginia, Senator Allen, raising this concern. I can assure him that he is correct that it makes perfect sense for provisions intended to encourage employers to fund their defined benefit pension plans by increasing the deduction limits to have the same effective date. I also agree that this should especially be true for provisions that update deduction limits for employers with a combination of plans. I look forward to working with my colleague on addressing this oversight.

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Mr. GRASSLEY. I am happy to confirm the understanding of my distinguished colleague from New Mexico, Senator BINGAMAN, regarding this provision. The provision is intended to buttress current exemption standards by providing additional standards that must be met for a credit counseling organization to claim exempt status. As the Senator knows, the IRS recently has challenged the exempt status of several credit counseling organizations because they are operated for a substantial non-exempt purpose, substantial private benefit and private inurement. Certain of these organizations exist merely to generate income from the sale of debt management plans, while providing minimal exempt purpose activities related to credit counseling. The standards imposed under this provision are intended to augment, not supplant, the IRS efforts and to ensure that exemption from consumer protection laws applies only to those organizations that can satisfy stricter tax-exempt standards. I also want to assure the distinguished Senator from New Mexico that we will continue to monitor developments in this industry to ensure that only those entities that serve a sufficient charitable and educational purpose can claim tax-exempt status and that such tax-exempt entities do not generate significant revenues from activities unrelated to their exempt purposes. If it turns out that the additional standards imposed by this legislation do not have the desired impact, you can be assured that we will not hesitate to revisit this area.

Mr. BINGAMAN. I want to thank the distinguished chairman of the Finance Committee for his clarification and his leadership on these important issues.

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Mr. GRASSLEY. Mr. President, I rise today in support of the Pension 7 Protection Act of 2006.

Every Member of the U.S. Senate should be proud to support this bill.

This is a bill that is about one thing--improving the retirement security of all Americans.

It been a long road to get here.

There were times, I will tell you, when I wondered if we would ever get here.

But the fact that we are here today shows that when people stick to a goal and work together, you can get great things done for the American people.

I want to commend Chairman ENZI for his outstanding leadership and his perseverance in leading us here today.

I can tell you that it wasn't an easy job.

I am also very pleased to commend the great work of my colleague and good friend, Senator BAUCUS, who was my partner in the Finance Committee and all the way through conference on this legislation.

We worked together and our staffs worked together.

I wish he could be here with me today to see final passage of this legislation, but as we all know, he is attending to family matters that are far more important than anything we could be doing here in the U.S. Senate.

I also want to thank Senator KENNEDY, who worked tirelessly on this bill and was critical to the bipartisan bill before us.

Why is this a good bill?

I could spend all night talking about all of the positive reforms in this bill, but don't worry--I am not going to do that at 10 o'clock here tonight.

But I do want to highlight a few parts of this legislation that will make Americans more secure in their retirement.

First and foremost, this bill will ensure that American workers can depend on their pensions. They will know that their pension will actually be there for them when they retire.

This bill will also protect the PBGC from absorbing billions of dollars in pension liabilities from bankrupt airlines and give those airlines' employees an opportunity to receive the full pension they've been promised.

This bill will protect workers from the next Enron by prohibiting employers from stuffing company stock in their 401(k) plans.

This bill will make permanent the bipartisan retirement savings provisions from the 2001 tax relief bill--increased 401(k) and IRA limits, a permanent low-income Savers' Credit, greater portability of retirement assets, and a wide array of other pro-savings initiatives.

These provisions are vital to building a ``savers' society,'' and I am proud that these provisions originated in the Senate Finance Committee and were included in the 2001 tax bill at the insistence of myself and Senator BAUCUS.

This bill will also encourage greater participation in retirement plans by promoting automatic enrollment arrangements.

These are just a few of the key reforms in this bill. This is legislation that every Member of the Senate can truly be proud to support.

I look forward to seeing the President sign it into law.

I would like to incorporate by reference a technical explanation being prepared by the staff of the Joint Committee on Taxation that describes the legislative intent with respect to H.R. 4, the Pension Protection Act of 2006. This document expresses our understanding of the provisions in the bill, and it will be a useful reference in understanding the legislation. Chairman Thomas also made a statement on the floor of the House of Representatives last Friday that he had requested this technical explanation. The technical explanation will be published by the staff of the Joint Committee on Taxation as document number JCX-38-06, Technical Explanation of H.R. 4, The Pension Protection Act of 2006, as passed by the House on July 28, 2006, and as considered by the Senate on August 3, 2006.

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Mr. GRASSLEY. Mr. President, after great effort by many people, the Senate has voted to agree to H.R. 4, the Pension Protection Act of 2006.

Credit must go to the dedicated members of my staff, who spent many hours over many months working on the issues that ultimately led to this bill. Kolan Davis, Mark Prater, John O'Neill, Dean Zerbe, Elizabeth Paris, Chris Javens, Cathy Barre, Anne Freeman, Elizabeth Goff, and Nick Wyatt showed great dedication to the tasks before them.

As is usually the case, the cooperation of Senator Baucus and his staff was extremely valuable. I particularly want to thank Russ Sullivan, Patrick Heck, Bill Dauster, Judy Miller, Stuart Sirkin, Jon Selib, Melissa Mueller, Rebecca Baxter and Ryan Abraham.

I want to show my appreciation towards HELP Committee Chairman Enzi's staff, including Katherine McGuire, Greg Dean, Diann Howland and David Thompson. I want to thank Portia Wu and Holly Fechner along with the rest of HELP Committee Ranking Member Kennedy's staff. I also want to thank the staff of Finance Committee member conferees on the pension bill. They include Evan Liddiard, Brendan Dunn, Manny Rossman, Wes Coulam, Jennifer Perkins, Jen Vesey, Amy Barber, Steve Bailey, and James Dennis.

I also want to mention Thomas Barthold, the acting chief of staff of the Joint Committee on Taxation and his staff. The efforts of Carolyn Smith, Patricia McDermott, and Nicole Flax were invaluable. Roger Colinvaux, Gordon Clay, and Ron Schultz provided great assistance with the charitable provisions that are in the bill. I also want to thank Theresa Pattara, who worked on my staff as a legislative fellow, for her work on the charitable provisions.

Finally, I want to show my appreciation to the staff of Senate Legislative Counsel, including Jim Fransen, Mark Mathiesen, Stacey Kern, and Mark McGunagle.

Mr. President, after great effort by many people, the Senate has voted to agree to H.R. 4, the Pension Protection Act of 2006.

Credit must go to the dedicated members of my staff, who spent many hours over many months working on the issues that ultimately led to this bill. Kolan Davis, Mark Prater, John O'Neill, Dean Zerbe, Elizabeth Paris, Chris Javens, Cathy Barre, Anne Freeman, Elizabeth Goff, and Nick Wyatt showed great dedication to the tasks before them.

As is usually the case, the cooperation of Senator Baucus and his staff was extremely valuable. I particularly want to thank Russ Sullivan, Patrick Heck, Bill Dauster, Judy Miller, Stuart Sirkin, Jon Selib, Melissa Mueller, Rebecca Baxter and Ryan Abraham.

I want to show my appreciation towards HELP Committee Chairman Enzi's staff, including Katherine McGuire, Greg Dean, Diann Howland and David Thompson. I want to thank Portia Wu and Holly Fechner along with the rest of HELP Committee Ranking Member Kennedy's staff. I also want to thank the staff of Finance Committee Member conferees on the pension bill. They include Evan Liddiard, Brendan Dunn, Manny Rossman, Wes Coulam, Jennifer Perkins, Jen Vesey, Amy Barber, Steve Bailey, and James Dennis.

I also want to mention Thomas Barthold, the acting Chief of Staff of the Joint Committee on Taxation and his staff. The efforts of Carolyn Smith, Patricia McDermott, and Nicole Flax were invaluable. Roger Colinvaux [CallIn-Vo], Gordon Clay, and Ron Schultz provided great assistance with the charitable provisions that are in the bill. I also want to thank Theresa Pattara, who worked on my staff as a legislative fellow, for her work on the charitable provisions.

Finally, I want to show my appreciation to the staff of Senate Legislative Counsel, including Jim Fransen, Mark Mathiesen, Stacey Kern, and Mark McGunagle.

I yield the floor.

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