"As Americans, we must guard our freedom of religion. It is one of our most important constitutional liberties," Grassley said. "My bill responds to recent decisions by federal judges which leave churches open to bankruptcy lawsuits and force charities to return money given through tithing. A federal judge should not be permitted or required to un-do a voluntary act of worship in the way of tithing, as described in the Bible."
In addition to protecting money which has been donated already to a church or tax-exempt charity organization as a percentage of one's income, the legislation Grassley introduced today would also protect tithing after Chapter 13 bankruptcy has been declared. Chapter 13 allows debtors to re-pay a discounted portion of their debts. Under current law, debtors are permitted to budget a moderate amount of money for entertainment expenses. At the same time, some courts have declared that debtors may not budget money to be tithed to churches.
"Under current law, a person can budget money for a burger and a movie but not for a charitable contribution to his or her church, even if that person believes his or her faith requires a tithe. It seems a violation of religious freedom that a federal judge can tell a citizen that he or she is not allowed to tithe," Grassley said.
In response, Grassley's Religious Liberty and Charitable Donation Protection Act of 1997 would amend two aspects of current federal bankruptcy law.
Last month, Grassley convened a hearing of the Judiciary Subcommittee on Administrative Oversight and the Courts to discuss this issue. He serves as Chairman of this subcommittee, which maintains jurisdiction over bankruptcy issues. Witnesses at the hearing shared first-hand accounts of their religious freedoms being impacted by the federal bankruptcy code.
In 1994, Grassley co-authored with former Sen. Howell Heflin of Alabama a law that created the National Bankrutpcy Review Commission. The Commission is scheduled to make recommendations to Congress later this month for an overhaul of the federal bankruptcy code. In addition to the bill introduced today, Grassley introduced legislation earlier this year to give permanent status to Chapter 12 of the federal bankruptcy code, which allows farmers declaring bankruptcy to reorganize debts and keep their family farms. Grassley first won approval for Chapter 12 during the farm crisis in 1986. Grassley also introduced legislation in September to close loopholes in the federal bankruptcy code that result in school districts being deprived of local property tax revenues.
Companion legislation to the Religious Liberty and Charitable Donation Protection Act of 1997 was introduced today in the U.S. House of Representatives by Rep. Ron Packard of California.