ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS

Subcommittee on Oversight

Houghton Announces Request for Written Comments on
 H.R. 2237, Expanding the Exemption from Unrelated
 Trade or Business Income for Conducting Certain Games of Chance

Congressman Amo Houghton (R-NY), Chairman, Subcommittee on Oversight of the Committee on Ways and Means, today announced that the Subcommittee is requesting written public comments for the record from all parties interested on H.R. 2237, a bill to amend the Internal Revenue Code 1986 to provide that the conducting of certain games of chance shall not be treated as an unrelated trade or business, sponsored by Representative Jim Ramstad (R-MN).

BACKGROUND:

The Internal Revenue Code requires tax-exempt organizations to pay tax at corporate rates on income derived from an unrelated trade or business.  In general, an unrelated trade or business is any trade or business that is not substantially related to the tax-exempt purpose that is the basis for the exemption from Federal income tax.  Activities in which substantially all of the work is performed by volunteers are not, however, considered to be unrelated trade or business.

Section 513(f) of the Internal Revenue Code narrows the term “unrelated trade or business” by excluding any trade or business that consists of conducting bingo games. 

Section 311(a) of P.L. 98-369 (as amended by P.L. 99-514) further excludes the conduct of State-regulated “games of chance” conducted by nonprofit organizations pursuant to a State law originally enacted on April 22, 1977.   This provision applies only to nonprofit organizations regulated by the State of North Dakota.

The Subcommittee is seeking comments on the following questions related to H.R. 2237:

• Would it be appropriate to expand the exemption for bingo games to include “games of chance” conducted by nonprofit organizations that are regulated by States other than the State of North Dakota?
• How should the term “games of chance” be defined in this context?
• Should Congress consider other changes to the definition of unrelated trade or business contained in section 513 of the Code?                       

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Any person or organization wishing to submit written comments for the record should send it electronically to hearingclerks.waysandmeans@mail.house.gov, along with a fax copy to (202) 225-2610, by close of business Friday, July 26, 2002.  Please Note: Due to the change in House mail policy, the U.S. Capitol Police will refuse sealed-packaged deliveries to all House Office Buildings.

FORMATTING REQUIREMENTS:

Each statement presented for printing to the Committee by a witness, any written statement or exhibit submitted for the printed record or any written comments in response to a request for written comments must conform to the guidelines listed below.  Any statement or exhibit not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.

1.   Due to the change in House mail policy, all statements and any accompanying exhibits for printing must be submitted electronically to, hearingclerks.waysandmeans@mail.house.gov, along with a fax copy to (202) 225-2610, in Word Perfect or MS Word format and MUST NOT exceed a total of 10 pages including attachments.  Witnesses are advised that the Committee will rely on electronic submissions for printing the official hearing record. 

2.  Copies of whole documents submitted as exhibit material will not be accepted for printing.  Instead, exhibit material should be referenced and quoted or paraphrased.  All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.

3.  Any statements must include a list of all clients, persons, or organizations on whose behalf the witness appears.  A supplemental sheet must accompany each statement listing the name, company, address, telephone and fax numbers of each witness.

Note:  All Committee advisories and news releases are available on the World Wide Web at http://waysandmeans.house.gov.