The President signed the Pension Protection Act of 2006, P.L. 109-280. In addition to mostly pension provisions in ERISA and the Internal Revenue Code, the Act amends the Code to modify provisions related to charitable contributions, tax-exempt organizations, and supporting organizations. The Act also amends the Economic Growth and Tax Relief Reconciliation Act of 2001 to permanently extend qualified tuition program provisions.

Summarized below are the primary provisions relating to exempt organizations, Tax Court procedures, and other provisions.

TITLE VIII--PENSION RELATED REVENUE PROVISIONS

Subtitle E--United States Tax Court Modernization
Jurisdiction of Tax Court Over Collection Due Process Cases
[Act §855; Code §6330]

The Act limits the review of a determination in a collection due process hearing to the Tax Court even if the Tax Court does not have jurisdiction over the underlying liability. Effective 60 days after the August 17, 2006 date of the enactment.

Provisions for Recall
[Act §856; Code §7443B (new)]

The Act modifies the recall provisions by adding §7443B to the Code, stating that any retired Tax Court judge may be called upon by the chief judge of the Tax Court to perform such duties as requested. The recall cannot exceed 90 days in any calendar year without the retired judge's consent. The Act also provides exceptions for illness. Compensation is to equal the current salary of a Tax Court judge less the retirement annuity.

Authority for Special Trial Judges to Hear and Decide Certain Employment Status Cases
[Act §857; Code §7443A]

The Act allows special trial judges to hear and decide certain employment status cases. Effective for any proceeding under §7436(c) with respect to which a decision has not become final before August 17, 2006.

Confirmation of Authority of Tax Court to Apply Doctrine of Equitable Recoupment
[Act §858; Code §6214]

The Act confirms the authority of the Tax Court to apply the doctrine of equitable recoupment. The Act provides that the Tax Court may apply the doctrine of equitable recoupment to the same extent that it is available in civil tax cases before the district courts and the Claims Court. Effective for any proceeding with respect to which a decision has not become final before August 17, 2006.

Tax Court Filing Fee in All Cases Commenced by Filing Petition
[Act §859; Code §7451]

The Act applies the $60 dollar fee in all cases commenced by filing a petition. Effective on August 17, 2006.

Expanded Use of Tax Court Practice Fee for Pro Se Taxpayers
[Act §860; Code §7475]

The Act allows the Tax Court to use the money from filing fees to provide services to pro se taxpayers. Effective on August 17, 2006.

TITLE XII--PROVISIONS RELATING TO EXEMPT ORGANIZATIONS

Subtitle A--Charitable Giving Incentives
Tax-Free Distributions From Individual Retirement Plans for Charitable Purposes
[Act §1201; Code §§408, 6034, 6104, and 6652]

The Act provides an exclusion from gross income for qualified charitable distributions of up to $100,000 from a traditional individual retirement account (IRA) or a Roth IRA, that would otherwise be included in income. To qualify, the charitable distribution must be made to a tax-exempt organization to which deductible contributions can be made. A qualified charitable distribution is any distribution from an IRA that is made in a taxable year beginning after December 31, 2005, and before January 1, 2008, directly by the IRA trustee to an organization described in §170(c). Direct distributions are eligible for the exclusion only if made on or after the date the IRA owner attains age 701/2. A distribution is treated as a qualified charitable distribution only to the extent that the distribution is includible in gross income. The exclusion does not apply to direct distributions only if a charitable contribution deduction for the entire distribution otherwise is allowable under §170.

The Act also modifies the information returns filed by split-interest trusts or trusts claiming charitable deductions under §642(c), and increase the penalties related to those information returns.

The provision relating to qualified charitable distributions from IRAs applies to distributions made in taxable years beginning after December 31, 2005, and before January 1, 2008. The provision relating to information returns applies to returns for taxable years beginning after December 31, 2006.

Extension of Modification of Charitable Deduction for Contributions of Food Inventory
[Act §1202; Code §170]

For donations of food inventory, the Act extends for all trades and businesses the enhanced deduction equal to the lesser of (i) the taxpayer's basis plus one-half of the difference between fair market value and basis, or (ii) twice the taxpayer's basis in the contributed inventory.

Effective for contributions of food inventory made in taxable years beginning after December 31, 2005, and before January 1, 2008.

Basis Adjustment to Stock of S Corporation Contributing Property
[Act §1203; Code §1367]

The Act provides that the amount of a shareholder's basis reduction in the stock of an S corporation, by reason of a charitable contribution made by the corporation, is equal to the shareholder's pro rata share of the adjusted basis of the contributed property.

Effective for contributions made in taxable years beginning after December 31, 2005, and before January 1, 2008.

Extension of Modification of Charitable Deduction for Contributions of Book Inventory
[Act §1204; Code §170]

The Act extends the current-law provision that adds public schools to the list of eligible donees for the enhanced deduction for contributions of qualified book inventory by C corporations.

Effective for contributions made in taxable years beginning after December 31, 2005, and before January 1, 2008.

Modification of Tax Treatment of Certain Payments to Controlling Exempt Organizations
[Act §1205; Code §§512, 6033]

Under current law, rent, royalty, annuity, and interest income paid to a tax-exempt organization by a controlled taxable subsidiary is generally treated as unrelated business income, that is taxable to the tax-exempt parent organization. The Act provides that payments received or accrued by certain exempt parents from taxable controlled subsidiaries is not treated as unrelated business taxable income.

Exempt organizations are required to report: (1) any interest, annuities, royalties, or rents received from each controlled entity (within the meaning of §512(b)(13)); (2) any loans made to each such controlled entity; and (3) any transfers of funds between such controlling organization and each such controlled entity.

The provision concerning the special rules for certain amounts received from controlled entities applies to payments received or accrued after December 31, 2005, and before January 1, 2008. The provision concerning returns by exempt organizations applies to returns the due date (determined without regard to extensions) of which is after August 17, 2006.

Encouragement of Contributions of Capital Gain Real Property Made for Conservation Purposes
[Act §1206; Code §§170, 545]

The Act raises the charitable deduction limit for individuals from 30% of adjusted gross income to 50% of adjusted gross income for qualified conservation contributions. The charitable deduction limit is raised to 100% of adjusted gross income for eligible farmers and ranchers, provided that such contribution does not prevent the use of the donated land for farming or ranching purposes. The provision allows a taxpayer to carry forward the deduction for 15 years.

Non-publicly traded corporations that are engaged in farming or ranching activities are entitled to deduct up to 100% of adjusted taxable income for such contributions, provided that the terms of the gift did not limit the farming activities on the property. Such corporations could also carryover the deduction for a 15-year period.

Effective for contributions made in taxable years beginning after December 31, 2005, and before January 1, 2008.

Excise Taxes Exemption for Blood Collector Organizations
[Act §1207; Code §§4041, 4221, 4253, 4483, 6416, 6421, 7701]

The Act provides that certain blood collector organizations are exempt from certain excise taxes (including the tax on heavy vehicles) with respect to activities related to blood collection.

Generally, effective January 1, 2007, however, the exemption from tax on heavy vehicles is effective for taxable periods beginning on or after July 1, 2007.

Subtitle B--Reforming Exempt Organizations
Part 1--General Reforms
Reporting on Certain Acquisitions of Interests in Insurance Contracts in Which Certain Exempt
Organizations Hold an Interest
[Act §1211; Code §§6050V (new), 6721, 6724]

The Act provides that charitable organizations must report to the Secretary certain acquisitions of interests in certain insurance contracts for two years beginning on August 17, 2006. The Secretary is required to issue a report within 30 months after the August 17, 2006 date of enactment examining if acquisitions of applicable insurance contracts are consistent with the tax-exempt purposes of those charitable organizations that acquire such contracts.

Effective for acquisitions of contracts after August 17, 2006.

Increase in Penalty Excise Taxes Relating to Public Charities, Social Welfare Organizations, and Private Foundations
[Act §1212; Code §§4941, 4942, 4943, 4944, 4945, 4958]

The Act doubles the amount of excise taxes applicable to certain activities by charities, social welfare organizations, private foundations, disqualified persons, and exempt organization managers.

Effective for taxable years beginning after August 17, 2006.

Reform of Charitable Contributions of Certain Easements in Registered Historic Districts and Reduced Deduction for Portion of Qualified
Conservation Contribution Attributable to
Rehabilitation Credit
[Act §1213; Code §170]

Under the Act, a charitable deduction is allowed with respect to easements concerning buildings located in a registered historic district. The easement must provide that no portion of the exterior of the building may be changed or altered in a manner inconsistent with the historical character of the exterior. The Act also clarifies that the charitable deduction is reduced if a rehabilitation tax credit has been claimed with respect to the donated property. The taxpayer is also required to attach a qualified appraisal and photographs for the tax return on which the deduction is claimed.

No deduction is allowed with respect to any qualified conservation contribution which is a restriction with respect to the exterior of a building and for which a deduction is claimed in excess of $10,000, unless the taxpayer includes with the return for the taxable year of the contribution a $500 filing fee. Any fee collected must be used for the enforcement of the provisions of §170(h).

The provisions concerning the special rules for buildings located in registered historic districts applies to contributions made after July 25, 2006. The provisions concerning the disallowance of the deduction for structures and land and the reduction for the rehabilitation credit apply to contributions made after August 17, 2006. The provision concerning the filing fee for certain contributions would apply to contributions made 180 days after the August 17, 2006 date of enactment.

Charitable Contributions of Taxidermy Property
[Act §1214; Code §170]

The Act limits the basis for donated taxidermy property to the cost of preparing, stuffing and mounting an animal. The value of the deduction equals the lesser of basis or fair market value.

Effective for contributions made after July 25, 2006.

Recapture of Tax Benefit for Charitable Contributions of Exempt Use Property Not Used for an Exempt Use
[Act §1215; Code §§170, 6050L, 6720B (new)]

The Act provides for the recapture of the tax benefit derived from the contribution of property, for which a fair market value deduction was claimed, if the property is not used for an exempt purpose of the donee organization. The Act also imposes reporting requirements relating to certain dispositions of donated property. Further, the Act imposes a penalty for the fraudulent identification of exempt use property.

The recapture and reporting provisions are effective for contributions made and returns filed after September 1, 2006. The penalty provision is effective for identifications made after August 17, 2006.

Limitation of Deduction for Charitable Contributions of Clothing and Household Items
[Act §1216; Code §170]

The Act specifies that no deduction is allowed for charitable contributions of clothing and household items if such items are not in good used condition or better. In addition, the Act provides that the Secretary may deny a deduction for any item with minimal monetary value. Finally, the Act provides that the above provisions do not apply to the contribution of any single clothing or household item for which a deduction of $500 or more is claimed if the taxpayer includes a qualified appraisal with his or her return.

Effective for contributions made after August 17, 2006.

Modification of Recordkeeping Requirements for Certain Charitable Contributions
[Act §1217; Code §170]

The Act requires that, in the case of a charitable contribution of money, regardless of the amount, a deduction is denied, unless the donor maintained a cancelled check, bank record, or receipt from the donee organization showing the name of the donee organization, the date of the contribution, and the amount of the contribution.

Effective for contributions made in taxable years beginning after August 17, 2006.

Contributions of Fractional Interests in Tangible Personal Property
[Act §1218; Code §§170, 2055, 2522]

The Act requires that charities receiving a fractional interest in an item of tangible personal property must take complete ownership of the item within 10 years of the initial fractional gift or the death of the donor, whichever occurs first. In addition, the Act provides that the donee must have: (1) taken possession of the item at least once during the 10-year period as long as the donor remains alive; and (2) used the item for the organization's exempt purpose. Also, the Act provides that the failure to comply with these requirements results in the recapture of all tax benefits plus interest, and the imposition of a 10% penalty on the recaptured amount.

Effective for contributions, bequests, and gifts made after August 17, 2006.

Provision Relating to Substantial and Gross Overstatements of Valuations
[Act §1219; Code §§6662, 6664, 6695A (new)]

The Act lowers the thresholds for imposing accuracy-related penalties on substantial and gross valuation misstatements submitted by taxpayers who claim deductions for donated property for which a qualified appraisal is required. Further, the Act applies this provision for purposes of estate tax appraisals and provides definitions of a qualified appraiser and qualified appraisals. Also, the Act eliminates the reasonable cause exception for gross misstatements. Finally, the Act imposes a penalty on appraisers whose appraisals result in substantial or gross valuation misstatements.

Generally effective for returns filed and appraisals prepared for returns filed after August 17, 2006. For a contribution of a qualified real property interest that is a restriction on the exterior of a building and the appraisal of such contribution, these provisions are effective for returns filed after July 25, 2006.

Additional Standards for Credit Counseling
Organizations
[Act §1220; Code §§501, 513]

The Act: (1) imposes certain organizational and operational requirements on tax-exempt organizations that offer credit counseling services; (2) limits, subject to a four-year transition rule, the allowable amount of debt management plan (DMP) income to 50% of revenues; and (3) requires application by §501(c)(4) organizations for recognition as a credit counseling organization. In order to stem abusive situations, the Act imposes restrictions on organizations offering credit counseling services with respect to loans, fees, and solicitation of contributions from consumers receiving counseling. Also, the Act, with certain exceptions, treats DMP services as an unrelated business.

Generally effective for taxable years beginning after August 17, 2006. For certain organizations whose provision of credit counseling services is a substantial purpose on August 17, 2006, these provisions are effective for taxable years beginning after August 17, 2007.

Expansion of Base of Tax on Private Foundation Net Investment Income
[Act §1221; Code §4940]

The Act amends the definition of gross investment income to include capital gains, notional principal contracts, annuities, and other substantially similar investment income.

Effective for taxable years beginning after August 17, 2006.

Definition of Convention or Association of Churches
[Act §1222; Code §7701]

The Act provides that any organization that is otherwise a convention or association of churches will not fail to qualify solely because the membership of such also includes individuals, and because individuals have voting rights in the organization.

Notification Requirement for Entities Not Currently Required to File
[Act §1223; Code §§6033, 6652, 7428]

The Act requires certain exempt organizations to file electronically an annual notice with the IRS containing basic contact and financial information. The Act provides that the requirement applies to organizations that currently do not have an annual filing requirement because their gross receipts are less than $25,000. Also, the Act provides for the loss of exempt status for any exempt organization that fails to file a return or notice required by §6033 for three consecutive years. Further, the Act provides that no action for declaratory relief may be brought with respect to any such revocation of status.

Effective for notices and returns for annual periods beginning after 2006.

Disclosure to State Officials Relating to Exempt Organizations
[Act §1224; Code §§6103, 6104]

The Act provides that, upon written request by the appropriate state official, the Secretary may disclose information regarding organizations for which the IRS has denied or revoked tax-exempt status, certain other actions the IRS may have taken, and returns filed by certain tax-exempt organizations.

Effective for requests made on or after August 17, 2006.

Public Disclosure of Information relating to Unrelated Business Income Tax Returns
[Act §1225; Code §6104]

The Act extends the present-law public disclosure requirements applicable to Form 990, Return of Organization Exempt From Income Tax, to the unrelated business income tax returns of §501(c)(3) organizations.

Effective for returns filed after August 17, 2006.

Study on Donor Advised Funds and Supporting
Organizations
[Act §1226]

The Act provides that the Secretary will undertake a study on the organization and operation of donor advised funds and of supporting organizations. The Act also provides that the study will include an examination of requirements for determining whether such organizations are operating in a manner consistent with the purposes or functions constituting the basis for their tax-exempt status. A report of such study must be submitted by August 17, 2007.

Part 2--Improved Accountability of
Donor Advised Funds
Excise Taxes Relating to Donor Advised Funds
[Act §1231; Code §§4963, 4966 (new), 4967 (new)]

The Act adds Subchapter G, relating to donor advised funds, to the Chapter 42 excise tax provisions. Specifically, the Act adds §4966, which imposes a 20% excise tax on a donor advised fund's sponsoring organization and a 5% excise tax (not in excess of $10,000) on certain of the fund's managers if the fund makes a taxable distribution. The Act defines a taxable distribution as a distribution from a donor advised fund to a natural person or to any other person if the distribution is for any purpose other than one specified in §170(c)(2)(B) or if the fund's sponsoring organization does not exercise §4945(h) expenditure responsibility. The Act excludes fund distributions to §170(b)(1)(A) organizations other than disqualified supporting organizations, to the fund's sponsoring organization, and to other donor advised funds. The Act includes specific definitions of donor advised funds, sponsoring organizations, fund managers, and disqualified supporting organizations in §4966.

The Act also adds §4967, which imposes a 125% excise tax if a sponsoring organization makes a distribution from a donor advised fund that results in a person described in §4958(f)(7) (as added by Act §1232, discussed below) receiving, directly or indirectly, a more than incidental benefit. Under the Act, the §4958(f)(7) person who advised as to the making of the distribution or who received the benefit of the distribution pays the tax. The Act also imposes a 10% excise tax (not in excess of $10,000) on certain of the fund's managers. The Act provides that the §4967 tax would not apply if a tax is imposed on the distribution under §4958.

Effective for taxable years beginning after August 17, 2006.

Excess Benefit Transactions Involving Donor Advised Funds and Sponsoring Organizations
[Act §1232; Code §4958]

The Act amends §4958, which imposes excise taxes on excess benefit transactions, to include provisions related to donor advised funds. The Act amends the §4958(f) definition of disqualified persons to include certain fund advisors (including specified family members and controlled entities) and sponsoring organization investment advisors (including specified family members and controlled entities). The Act also amends §4958(c) to treat certain fund transactions (including grants, loans, compensation, or similar payments to certain persons) as excess benefit transactions.

Effective for transactions occurring after August 17, 2006.

Excess Business Holdings of
Donor Advised Funds
[Act §1233; Code §4943]

The Act amends §4943, which imposes excise taxes on private foundations' excess business holdings, to impose the tax on donor advised funds (with special rules for the funds' present holdings). The Act includes a provision defining disqualified persons for §4943 purposes to include certain fund donors (including specified family members and controlled entities).

Effective for taxable years beginning after August 17, 2006.

Treatment of Charitable Contribution Deductions to Donor Advised Funds
[Act §1234; Code §§170, 2055, 2522]

The Act amends §§170, 2055, and 2522 to provide that a charitable contribution deduction is allowed for a contribution to a donor advised fund only if the fund's sponsoring organization is not a type III supporting organization as defined in §4943(f)(5) (as added by Act §1243, discussed below) that is not functionally integrated or, respectively, a §170(c)(3), (4), or (5) organization, a §2055(a)(3) or (4) organization, or a §2522(a)(3) or (4) organization. Also, the Act provides that a contribution deduction is not allowed unless the fund's sponsoring organization gives the donor a contemporaneous written acknowledgement that the organization has exclusive legal control over the contributed assets.

Effective for contributions made after the date that is 180 days after the August 17, 2006 date of enactment.

Returns of, and Applications for Recognition by, Sponsoring Organizations
[Act §1235; Code §§508, 6033]

The Act amends the §6033 reporting requirements to require a donor advised fund's sponsoring organization to include specific information about the fund on the organization's annual information return. The Act requires the sponsoring organization to list the total number of donor advised funds it owns at the end of the taxable year, the value of the assets held in such funds at the end of the taxable year, and the contributions to and grants from such funds during the taxable year. The Act also amends §508 to require a sponsoring organization applying for tax-exempt status to notify the IRS whether the organization maintains or plans to maintain donor advised funds and the manner in which the organization plans to operate such funds.

The amendment governing the filing of annual information returns applies to returns filed for taxable years ending after August 17, 2006. The provision requiring IRS notification on the operation of donor advised funds applies to organizations applying for tax-exempt status after August 17, 2006.

Part 3--Improved Accountability of Supporting Organizations
Requirements for Supporting Organizations
[Act §1241; Code §509]

The Act amends §509(a)(3)(B) to require a supporting organization to be “operated, supervised, or controlled by” one or more §509(a)(1) or (2) organizations, to be “supervised or controlled in connection with” one or more such organizations, or to be “operated in connection with” one or more such organizations. The Act also amends §509 to require supporting organizations falling into the “operated in connection with” category (referred to as type III supporting organizations) to be responsive to their supported organizations by supplying such information as Treasury may require. The Act prohibits type III supporting organizations from being operated in connection with foreign organizations (with a delayed effective date for organizations operated in connection with foreign organizations on August 17, 2006). Under the Act, a supporting organization does not qualify as a type III supporting organization or as falling into the “operated, supervised, or controlled by” category (referred to as a type I supporting organization) if the organization accepts gifts from certain persons (including specified family members and controlled entities but not including §509(a)(1), (2), or (4) organizations) in control of such organization. The Act provides that a trust is not considered to be a type III supporting organization solely because the trust is a charitable trust under state law, a supported organization is a beneficiary of the trust, and the supported organization can enforce the trust and compel an accounting. The Act requires Treasury to promulgate new §509 regulations specifying the payments that must be made by type III supported organizations (other than functionally integrated type III supporting organizations) to ensure that a significant amount is paid to supported organizations.

Effective on August 17, 2006, except that the provision limiting charitable trusts as type III supporting organizations would take effect for existing type III supporting organization charitable trusts on August 18, 2007.

Excess Benefit Transactions Involving Supporting Organizations
[Act §1242; Code §4958]

The Act amends §4958 to include supporting organization provisions in the excess benefit transaction excise tax rules. Specifically, the Act amends the §4958(f)(1) definition of disqualified persons to include certain persons with substantial influence over the supporting organization (including specified family members and controlled entities). The Act also amends §4958(c) to treat certain supporting organization transactions (including grants, loans, compensation, or similar payments to certain persons) as excess benefit transactions.

The provisions governing the definition of disqualified persons applies to transactions occurring after August 17, 2006. The provisions governing the definition of excess benefit transactions applies to transactions occurring after July 25, 2006.

Excess Business Holdings of Supporting Organizations
[Act §1243; Code §4943]

The Act amends the §4943 excess business holdings excise tax rules to impose the tax on type III supporting organizations (other than functionally integrated type III organizations) and a supporting organization that falls into the “supervised or controlled in connection with” a §509(a)(1) or (2) organization category (referred to as a type II supporting organization) if the type II supporting organization accepts contributions from certain persons in control of the organization as described in §509(f)(2)(B) (as added by Act §1241, discussed above). The Act includes a provision defining disqualified persons for §4943 purposes to include certain persons with substantial influence over the type II or III supporting organization and certain substantial contributors (including, in each case, specified family members and controlled entities) and certain organizations that are controlled by the same persons or with the same substantial contributors. The Act defines a functionally integrated type III supporting organization as a type III supporting organization that is not required (by regulations) to make payments to supported organizations because of the organization's activities related to performing the functions of, or carrying out the purposes of, such supported organizations. The Act includes special rules for certain present holdings of type III supporting organizations.

Effective for taxable years beginning after August 17, 2006.

Treatment of Amounts Paid to Supporting Organizations by Private Foundations
[Act §1244; Code §§4942, 4945]

The Act amends §4942(g)(4) (relating to the definition of qualifying distributions for purposes of the private foundation excise taxes on the failure to distribute income) to provide that qualifying distributions do not include distributions by nonoperating private foundations to a type III supporting organization (other than a functionally integrated type III supporting organization) and to a type I or type II supporting organization or a functionally integrated type III supporting organization if a disqualified person of the private foundation controls such organization or one of its supported organizations or regulations specify that a distribution to such organization is inappropriate. The Act amends §4945(d)(4)(A) (relating to the exclusion of certain grants to organizations from the private foundation excise taxes on taxable expenditures) to exclude from the exclusion a type III supporting organization (other than a functionally integrated type III supporting organization) and a type I or type II supporting organization or a functionally integrated type III supporting organization if a disqualified person of the private foundation controls such organization or one of its supported organizations or regulations specify that a distribution to such organization is inappropriate.

Effective for distributions and expenditures after August 17, 2006.

Returns of Supporting Organizations
[Act §1245; Code §6033]

The Act amends §6033(a)(3)(B), which governs discretionary exceptions to the annual information return filing requirements, to exclude §509(a)(3) supporting organizations. The Act adds provisions to §6033 requiring a supporting organization to list its supported organizations on its annual information returns, indicate whether the supporting organization is a type I, II, or III supporting organization, and certify that it satisfies the §509(a)(3)(C) requirements.

Effective for returns filed for taxable years ending after August 17, 2006.

TITLE XIII--OTHER PROVISIONS

Exception to the Local Furnishing Requirement of the Tax-Exempt Bond Rules
[Act §1303; Code §142]

The Act provides that the limitation under §142(f)(1) requiring local furnishing of electric energy does not apply to bonds issued before May 31, 2006, and used to finance the acquisition of either the Snettisham hydroelectric facility or the Lake Dorothy hydroelectric facility, where the electricity is furnished to the City of Hoonah, Alaska.

Qualified Tuition Programs
[Act §1304; Code §529]

The Act repeals the sunset provision in the 2001 Economic Growth and Tax Relief Reconciliation Act as it applies to qualified tuition programs under §529. Thus, the exemption from taxation of qualified tuition programs would be made permanent.