[House Report 113-498]
[From the U.S. Government Publishing Office]
113th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 113-498
======================================================================
FIGHTING HUNGER INCENTIVE ACT OF 2014
_______
June 26, 2014.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Camp, from the Committee on Ways and Means, submitted the following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 4719]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 4719) to amend the Internal Revenue Code of 1986 to
permanently extend and expand the charitable deduction for
contributions of food inventory, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
CONTENTS
Page
I. SUMMARY AND BACKGROUND...........................................3
A. Purpose and Summary................................. 3
B. Background and Need for Legislation................. 3
C. Legislative History................................. 4
II. EXPLANATION OF THE BILL..........................................4
A. Extension and Expansion of Charitable Deduction for
Contributions of Food Inventory (sec. 170 of the
Code).............................................. 4
III. VOTES OF THE COMMITTEE...........................................7
IV. BUDGET EFFECTS OF THE BILL.......................................7
A. Committee Estimate of Budgetary Effects............. 7
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority...................... 8
C. Cost Estimate Prepared by the Congressional Budget
Office............................................. 8
D. Macroeconomic Impact Analysis....................... 9
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.......9
A. Committee Oversight Findings and Recommendations.... 9
B. Statement of General Performance Goals and
Objectives......................................... 9
C. Information Relating to Unfunded Mandates........... 10
D. Applicability of House Rule XXI 5(b)................ 10
E. Tax Complexity Analysis............................. 10
F. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits............................ 10
G. Duplication of Federal Programs..................... 10
H. Disclosure of Directed Rule Makings................. 11
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........11
VII. DISSENTING VIEWS................................................14
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Fighting Hunger Incentive Act of
2014''.
SEC. 2. EXTENSION AND EXPANSION OF CHARITABLE DEDUCTION FOR
CONTRIBUTIONS OF FOOD INVENTORY.
(a) Permanent Extension.--Section 170(e)(3)(C) of the Internal
Revenue Code of 1986 is amended by striking clause (iv).
(b) Increase in Limitation.--Section 170(e)(3)(C) of such Code, as
amended by subsection (a), is amended by striking clause (ii), by
redesignating clause (iii) as clause (iv), and by inserting after
clause (i) the following new clauses:
``(ii) Limitation.--The aggregate amount of
such contributions for any taxable year which
may be taken into account under this section
shall not exceed--
``(I) in the case of any taxpayer
other than a C corporation, 15 percent
of the taxpayer's aggregate net income
for such taxable year from all trades
or businesses from which such
contributions were made for such year,
computed without regard to this
section, and
``(II) in the case of a C
corporation, 15 percent of taxable
income (as defined in subsection
(b)(2)(C)).
``(iii) Rules related to limitation.--
``(I) Carryover.--If such aggregate
amount exceeds the limitation imposed
under clause (ii), such excess shall be
treated (in a manner consistent with
the rules of subsection (d)) as a
charitable contribution described in
clause (i) in each of the 5 succeeding
years in order of time.
``(II) Coordination with overall
corporate limitation.--In the case of
any charitable contribution allowable
under clause (ii)(II), subsection
(b)(2)(A) shall not apply to such
contribution, but the limitation
imposed by such subsection shall be
reduced (but not below zero) by the
aggregate amount of such contributions.
For purposes of subsection (b)(2)(B),
such contributions shall be treated as
allowable under subsection
(b)(2)(A).''.
(c) Determination of Basis for Certain Taxpayers.--Section
170(e)(3)(C) of such Code, as amended by subsections (a) and (b), is
amended by adding at the end the following new clause:
``(v) Determination of basis for certain
taxpayers.--If a taxpayer--
``(I) does not account for
inventories under section 471, and
``(II) is not required to capitalize
indirect costs under section 263A,
the taxpayer may elect, solely for purposes of
subparagraph (B), to treat the basis of any
apparently wholesome food as being equal to 25
percent of the fair market value of such
food.''.
(d) Determination of Fair Market Value.--Section 170(e)(3)(C) of such
Code, as amended by subsections (a), (b), and (c), is amended by adding
at the end the following new clause:
``(vi) Determination of fair market value.--
In the case of any such contribution of
apparently wholesome food which cannot or will
not be sold solely by reason of internal
standards of the taxpayer, lack of market, or
similar circumstances, or by reason of being
produced by the taxpayer exclusively for the
purposes of transferring the food to an
organization described in subparagraph (A), the
fair market value of such contribution shall be
determined--
``(I) without regard to such internal
standards, such lack of market, such
circumstances, or such exclusive
purpose, and
``(II) by taking into account the
price at which the same or
substantially the same food items (as
to both type and quality) are sold by
the taxpayer at the time of the
contribution (or, if not so sold at
such time, in the recent past).''.
(e) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
contributions made after December 31, 2013, in taxable years
ending after such date.
(2) Limitation; applicability to c corporations.--The
amendments made by subsection (b) shall apply to contributions
made in taxable years beginning after December 31, 2013.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
H.R. 4719, reported by the Committee on Ways and Means,
provides that contributions of food inventory by pass-through
businesses may qualify for an enhanced deduction, which is
currently available to C corporations. A similar temporary
provision expired for taxable years beginning after December
31, 2013. H.R. 4719 increases the limitation on deductible
contributions of food inventory to 15 percent of the taxpayer's
adjusted gross income (15 percent of taxable income in the case
of a C corporation) per year.
In addition, H.R. 4719 provides a special basis rule for
pass-through businesses that do not maintain inventories, under
which such businesses could treat their basis in the
contributed food as equal to 25 percent of the fair market
value of such food. H.R. 4719 establishes a rule to determine
the fair market value of contributed food inventory that cannot
or will not be sold by the business because of internal
standards, lack of market or similar circumstances or because
it was produced exclusively for the purpose of transferring it
to a charitable organization.
B. Background and Need for Legislation
While the Committee continues actively to pursue
comprehensive tax reform as a critical means of promoting
economic growth and job creation, the Committee also believes
that it is important to provide individuals and small
businesses permanent, immediate tax relief to encourage faster
economic growth and job creation, while fostering charitable
giving. By restoring and making permanent the enhanced
deduction for donations of food inventory by pass-through
businesses, like S corporations, H.R. 4719 makes the enhanced
deduction available to all types of businesses, not just C
corporations. Accordingly, H.R. 4719 provides an important
incentive for food-service companies like restaurants to
donate, rather than discard, surplus wholesome food inventory
to charitable organizations that help children and families in
need. Recognizing that donated food inventory must be properly
saved, packaged, labeled and kept refrigerated or frozen until
it is delivered to the charitable organization, H.R. 4719
encourages food-service companies to incur and offset these
costs through the enhanced deduction. According to testimony
received by the Committee, the enhanced deduction for food
inventory has been a vital incentive to support community food
pantries and other tax-exempt organizations that work to fight
hunger in local communities across the nation.
C. Legislative History
Background
H.R. 4719 was introduced on May 22, 2014, and was referred
to the Committee on Ways and Means.
Committee action
The Committee on Ways and Means marked up H.R. 4719, the
Fighting Hunger Incentive Act of 2014, on May 29, 2014, and
ordered the bill, as amended, favorably reported (with a quorum
being present).
Committee hearings
The need for permanent rules regarding the charitable
deduction for contributions of food inventory was discussed at
no fewer than two hearings during the 112th and 113th
Congresses:
Select Revenue Measures Subcommittee
Hearing on Certain Expiring Tax Provisions (April 26,
2012); and
Full Committee Hearing on Tax Reform and
Charitable Contributions (February 14, 2013).
II. EXPLANATION OF THE BILL
A. Extension and Expansion of Charitable Deduction for Contributions of
Food Inventory (sec. 170 of the Code)
PRESENT LAW
Charitable contributions in general
In general, an income tax deduction is permitted for
charitable contributions, subject to certain limitations that
depend on the type of taxpayer, the property contributed, and
the donee organization.\1\ In the case of an individual, the
deduction is limited to various percentages of the contribution
base, depending on the donee and the property contributed. In
the case of a corporation,\2\ the deduction generally is
limited to ten percent of the taxable income (with
modifications).\3\ Contributions in excess of these limitations
may be carried forward for up to five taxable years.
---------------------------------------------------------------------------
\1\Sec. 170.
\2\Sec. 170(b)(1). The contribution base is the adjusted gross
income determined without regard net operating loss carrybacks.
\3\Sec. 170(b)(2).
---------------------------------------------------------------------------
Charitable contributions of cash are deductible in the
amount contributed. Subject to several exceptions,
contributions of property are deductible at the fair market
value of the property. One exception provides that the amount
of the charitable contribution is reduced by the amount of any
gain which would not have been long-term capital gain if the
property contributed had been sold by the taxpayer at its fair
market value at the time of the contribution.\4\
---------------------------------------------------------------------------
\4\Sec. 170(e)(1)(A).
---------------------------------------------------------------------------
General rules regarding contributions of inventory
As a result of the exception described above, a taxpayer's
deduction for charitable contributions of inventory generally
is limited to the taxpayer's basis (typically, cost) in the
inventory, or, if less, the fair market value of the inventory.
However, for certain contributions of inventory, a C
corporation may claim an enhanced deduction equal to the lesser
of (1) basis plus one-half of the item's appreciation (i.e.,
basis plus one-half of fair market value in excess of basis) or
(2) two times basis.\5\ To be eligible for the enhanced
deduction, the contributed property generally must be inventory
of the taxpayer and must be contributed to a charitable
organization described in section 501(c)(3) (except for private
nonoperating foundations), and the donee must (1) use the
property consistent with the donee's exempt purpose solely for
the care of the ill, the needy, or infants; (2) not transfer
the property in exchange for money, other property, or
services; and (3) provide the taxpayer a written statement that
the donee's use of the property will be consistent with such
requirements. In the case of contributed property subject to
the Federal Food, Drug, and Cosmetic Act, as amended, the
property must satisfy the applicable requirements of such Act
on the date of transfer and for 180 days prior to the
transfer.\6\
---------------------------------------------------------------------------
\5\Sec. 170(e)(3).
\6\Sec. 170(e)(3)(A)(iv).
---------------------------------------------------------------------------
To claim the enhanced deduction, the taxpayer must
establish that the fair market value of the donated item
exceeds basis. The valuation of food inventory has been the
subject of disputes between taxpayers and the IRS.\7\
---------------------------------------------------------------------------
\7\Lucky Stores Inc. v. Commissioner, 105 T.C. 420 (1995) (holding
that the value of surplus bread inventory donated to charity was the
full retail price of the bread rather than half the retail price, as
the IRS asserted).
---------------------------------------------------------------------------
Temporary rule expanding and modifying the enhanced deduction for
contributions of food inventory
Under a temporary provision, any taxpayer engaged in a
trade or business, whether or not a C corporation, is eligible
to claim the enhanced deduction for donations of food
inventory.\8\ For taxpayers other than C corporations, the
total deduction for donations of food inventory in a taxable
year generally may not exceed ten percent of the taxpayer's net
income for such taxable year from all sole proprietorships, S
corporations, or partnerships (or other non C corporations)
from which contributions of apparently wholesome food are made.
For example, if a taxpayer is a sole proprietor, a shareholder
in an S corporation, and a partner in a partnership, and each
business makes charitable contributions of food inventory, the
taxpayer's deduction for donations of food inventory is limited
to ten percent of the taxpayer's net income from the sole
proprietorship and the taxpayer's interests in the S
corporation and partnership. However, if only the sole
proprietorship and the S corporation made charitable
contributions of food inventory, the taxpayer's deduction would
be limited to ten percent of the net income from the trade or
business of the sole proprietorship and the taxpayer's interest
in the S corporation, but not the taxpayer's interest in the
partnership.\9\
---------------------------------------------------------------------------
\8\Sec. 170(e)(3)(C).
\9\The ten-percent limitation does not affect the application of
the generally applicable percentage limitations. For example, if ten
percent of a sole proprietor's net income from the proprietor's trade
or business is greater than 50 percent of the proprietor's contribution
base which otherwise limits the deduction, the available deduction for
the taxable year (with respect to contributions to public charities) is
50 percent of the proprietor's contribution base. Consistent with
present law, these contributions may be carried forward because they
exceed the 50 percent limitation. Contributions of food inventory by a
taxpayer that is not a C corporation that exceed the ten-percent
limitation but do not exceed the 50 percent limitation may not be
carried forward.
---------------------------------------------------------------------------
Under the temporary provision, the enhanced deduction for
food is available only for food that qualifies as ``apparently
wholesome food.'' Apparently wholesome food is defined as food
intended for human consumption that meets all quality and
labeling standards imposed by Federal, State, and local laws
and regulations even though the food may not be readily
marketable due to appearance, age, freshness, grade, size,
surplus, or other conditions.
The provision does not apply to contributions made after
December 31, 2013.
REASONS FOR CHANGE
The Committee believes that charitable organizations
benefit from charitable contributions of food inventory by non
C corporations and that the enhanced deduction is a useful
incentive for the making of such contributions. Accordingly,
the Committee believes it is appropriate to make permanent the
special rule for charitable contributions of food inventory by
all taxpayers engaged in a trade or business.
EXPLANATION OF PROVISION
The provision reinstates and makes permanent the enhanced
deduction for contributions of food inventory.
The provision also modifies the enhanced deduction for food
inventory contributions by: (1) increasing the charitable
percentage limitation for food inventory contributions and
clarifying the carryover and coordination rules for these
contributions; (2) including a presumption concerning the tax
basis of food inventory donated by certain businesses; and (3)
including presumptions that may be used when valuing donated
food inventory.
First, the ten-percent limitation described above
applicable to taxpayers other than C corporations is increased
to 15 percent. For C corporations, these contributions are made
subject to a limitation of 15 percent of taxable income (as
modified). The general ten-percent limitation for a C
corporation does not apply to these contributions, but the ten-
percent limitation applicable to other contributions is reduced
by the amount of these contributions. Qualifying food inventory
contributions in excess of these 15-percent limitations may be
carried forward and treated as qualifying food inventory
contributions in each of the five succeeding years in order of
time.
Second, if the taxpayer does not account for inventory
under section 471 and is not required to capitalize indirect
costs under section 263A, the taxpayer may elect, solely for
computing the enhanced deduction for food inventory, to treat
the basis of any apparently wholesome food as being equal to 25
percent of the fair market value of such food.
Third, in the case of any contribution of apparently
wholesome food which cannot or will not be sold solely by
reason of internal standards of the taxpayer, lack of market,
or similar circumstances, or by reason of being produced by the
taxpayer exclusively for the purposes of transferring the food
to an organization described in section 501(c)(3), the fair
market value of such contribution shall be determined (1)
without regard to such internal standards, such lack of market
or similar circumstances, or such exclusive purpose, and (2) by
taking into account the price at which the same or
substantially the same food items (as to both type and quality)
are sold by the taxpayer at the time of the contributions (or,
if not so sold at such time, in the recent past).
EFFECTIVE DATE
The provision is generally effective for contributions made
after December 31, 2013, in taxable years ending after that
date. The increase in the percentage limit and the related
carryover and coordination rules are effective for
contributions made in taxable years beginning after December
31, 2013.
III. VOTES OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the vote of the Committee on Ways and Means in its
consideration of H.R. 4719, the Fighting Hunger Incentive Act
of 2014, on May 29, 2014.
The bill, H.R. 4719, was ordered favorably reported as
amended by a roll call vote of 23 yeas to 13 nays (with a
quorum being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Camp....................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Rangel....... ........ X .........
Mr. Brady...................... X ........ ......... Mr. McDermott.... ........ X .........
Mr. Ryan....................... X ........ ......... Mr. Lewis........ ........ ........ .........
Mr. Nunes...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Becerra...... ........ ........ .........
Mr. Reichert................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Boustany................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Gerlach.................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Price...................... X ........ ......... Mr. Kind......... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Pascrell..... ........ X .........
Mr. Smith...................... X ........ ......... Mr. Crowley...... ........ ........ .........
Mr. Schock..................... X ........ ......... Ms. Schwartz..... ........ X .........
Ms. Jenkins.................... X ........ ......... Mr. Davis........ ........ X .........
Mr. Paulsen.................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Marchant................... X
Ms. Black...................... X
Mr. Reed....................... X
Mr. Young...................... X
Mr. Kelly...................... X
Mr. Griffin.................... X
Mr. Renacci.................... X
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of the bill, H.R. 4719, as
reported.
The bill, as reported, is estimated to have the following
effect on Federal budget receipts for fiscal years 2014-2024:
FISCAL YEARS
[Millions of dollars]
----------------------------------------------------------------------------------------------------------------
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014-19 2014-24
----------------------------------------------------------------------------------------------------------------
-16 -205 -163 -169 -175 -181 -188 -194 -201 -208 -215 -909 -1,915
----------------------------------------------------------------------------------------------------------------
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority. The
Committee further states that the revenue-reducing tax
provisions involve increased tax expenditures. (See amounts in
table in Part IV.A., above.)
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by CBO is
provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 5, 2014.
Hon. Dave Camp,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4719, the Fighting
Hunger Incentive Act of 2014.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Logan
Timmerhoff.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 4719--Fighting Hunger Incentive Act of 2014
H.R. 4719 would amend the Internal Revenue Code to
permanently extend and expand certain expired provisions that
provided an enhanced tax deduction for businesses that donated
their food inventory to charitable organizations. The enhanced
deduction for food inventory contributions expired after
December 31, 2013, and applied to sole proprietors,
partnerships, and other businesses not organized as C
corporations (which are already permanently allowed an enhanced
deduction under more general provisions of current law). H.R.
4719 would also expand the maximum deduction for all businesses
by allowing deductions of food inventory donations up to 15
percent of the net income of the donating organization, an
increase from the 10 percent allowed permanently under current
law for C corporations and allowed previously for other
businesses. In addition, the bill would allow certain
businesses to make alternative assumptions about the cost basis
and fair market value of donated food inventory.
The staff of the Joint Committee on Taxation (JCT)
estimates that enacting H.R. 4719 would reduce revenues, thus
increasing federal budget deficits, by about $1.9 billion over
the 2014-2024 period.
The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting
direct spending and revenues. Enacting H.R. 4719 would result
in revenue losses in each year beginning in 2014. The estimated
increases in the deficit are shown in the following table.
JCT has determined that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act.
The CBO staff contact for this estimate is Logan
Timmerhoff. The estimate was approved by David Weiner,
Assistant Director for Tax Analysis.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 4719, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON MAY 29, 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------------------------------------------------------------
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014-2019 2014-2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN THE DEFICIT
Statutory Pay-As-You-Go Effects...................... 16 205 163 169 175 181 188 194 201 208 215 909 1,915
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Staff of the Joint Committee on Taxation.
D. Macroeconomic Impact Analysis
In compliance with clause 3(h)(2) of rule XIII of the Rules
of the House of Representatives, the following statement is
made by the Joint Committee on Taxation with respect to the
provisions of the bill amending the Internal Revenue Code of
1986: the effects of the bill on economic activity are so small
as to be incalculable within the context of a model of the
aggregate economy.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee advises that it was as a result of the
Committee's review of the provisions of H.R. 4719 that the
Committee concluded that it is appropriate to report the bill,
as amended, favorably to the House of Representatives with the
recommendation that the bill do pass.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
D. Applicability of House Rule XXI 5(b)
Rule XXI 5(b) of the Rules of the House of Representatives
provides, in part, that ``A bill or joint resolution,
amendment, or conference report carrying a Federal income tax
rate increase may not be considered as passed or agreed to
unless so determined by a vote of not less than three-fifths of
the Members voting, a quorum being present.'' The Committee has
carefully reviewed the bill, and states that the bill does not
involve any Federal income tax rate increases within the
meaning of the rule.
E. Tax Complexity Analysis
Section 4022(b) of the Internal Revenue Service
Restructuring and Reform Act of 1998 (the ``IRS Reform Act'')
requires the staff of the Joint Committee on Taxation (in
consultation with the Internal Revenue Service and the Treasury
Department) to provide a tax complexity analysis. The
complexity analysis is required for all legislation reported by
the Senate Committee on Finance, the House Committee on Ways
and Means, or any committee of conference if the legislation
includes a provision that directly or indirectly amends the
Internal Revenue Code and has widespread applicability to
individuals or small businesses.
Pursuant to clause 3(h)(1) of rule XIII of the Rules of the
House of Representatives, the staff of the Joint Committee on
Taxation has determined that a complexity analysis is not
required under section 4022(b) of the IRS Reform Act because
the bill contains no provisions that amend the Code and that
have ``widespread applicability'' to individuals or small
businesses, within the meaning of the rule.
F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill, and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
G. Duplication of Federal Programs
In compliance with Sec. 3(j)(2) of H. Res. 5 (113th
Congress), the Committee states that no provision of the bill
establishes or reauthorizes: (1) a program of the Federal
Government known to be duplicative of another Federal program,
(2) a program included in any report from the Government
Accountability Office to Congress pursuant to section 21 of
Public Law 111-139, or (3) a program related to a program
identified in the most recent Catalog of Federal Domestic
Assistance, published pursuant to the Federal Program
Information Act (Public Law 95-220, as amended by Public Law
98-169).
H. Disclosure of Directed Rule Makings
In compliance with Sec. 3(k) of H. Res. 5 (113th Congress),
the following statement is made concerning directed rule
makings: The Committee estimates that the bill requires no
directed rule makings within the meaning of such section.
VI. 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 italic, existing law in which no change is
proposed is shown in roman):
INTERNAL REVENUE CODE OF 1986
* * * * * * *
Subtitle A--Income Taxes
* * * * * * *
CHAPTER 1--NORMAL TAXES AND SURTAXES
* * * * * * *
Subchapter B--Computation of Taxable Income
* * * * * * *
PART VI--ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS
* * * * * * *
SEC. 170. CHARITABLE, ETC., CONTRIBUTIONS AND GIFTS.
(a) * * *
* * * * * * *
(e) Certain Contributions of Ordinary Income and Capital Gain
Property.--
(1) * * *
* * * * * * *
(3) Special rule for certain contributions of
inventory and other property.--
(A) * * *
* * * * * * *
(C) Special rule for contributions of food
inventory.--
(i) * * *
[(ii) Limitation.--In the case of a
taxpayer other than a C corporation,
the aggregate amount of such
contributions for any taxable year
which may be taken into account under
this section shall not exceed 10
percent of the taxpayer's aggregate net
income for such taxable year from all
trades or businesses from which such
contributions were made for such year,
computed without regard to this
section.]
(ii) Limitation.--The aggregate
amount of such contributions for any
taxable year which may be taken into
account under this section shall not
exceed--
(I) in the case of any
taxpayer other than a C
corporation, 15 percent of the
taxpayer's aggregate net income
for such taxable year from all
trades or businesses from which
such contributions were made
for such year, computed without
regard to this section, and
(II) in the case of a C
corporation, 15 percent of
taxable income (as defined in
subsection (b)(2)(C)).
(iii) Rules related to limitation.--
(I) Carryover.--If such
aggregate amount exceeds the
limitation imposed under clause
(ii), such excess shall be
treated (in a manner consistent
with the rules of subsection
(d)) as a charitable
contribution described in
clause (i) in each of the 5
succeeding years in order of
time.
(II) Coordination with
overall corporate limitation.--
In the case of any charitable
contribution allowable under
clause (ii)(II), subsection
(b)(2)(A) shall not apply to
such contribution, but the
limitation imposed by such
subsection shall be reduced
(but not below zero) by the
aggregate amount of such
contributions. For purposes of
subsection (b)(2)(B), such
contributions shall be treated
as allowable under subsection
(b)(2)(A).
[(iii)] (iv) Apparently wholesome
food.--For purposes of this
subparagraph, the term ``apparently
wholesome food'' has the meaning given
to such term by section 22(b)(2) of the
Bill Emerson Good Samaritan Food
Donation Act (42 U.S.C. 1791(b)(2)), as
in effect on the date of the enactment
of this subparagraph.
[(iv) Termination.--This subparagraph
shall not apply to contributions made
after December 31, 2013.]
(v) Determination of basis for
certain taxpayers.--If a taxpayer--
(I) does not account for
inventories under section 471,
and
(II) is not required to
capitalize indirect costs under
section 263A,
the taxpayer may elect, solely for
purposes of subparagraph (B), to treat
the basis of any apparently wholesome
food as being equal to 25 percent of
the fair market value of such food.
(vi) Determination of fair market
value.--In the case of any such
contribution of apparently wholesome
food which cannot or will not be sold
solely by reason of internal standards
of the taxpayer, lack of market, or
similar circumstances, or by reason of
being produced by the taxpayer
exclusively for the purposes of
transferring the food to an
organization described in subparagraph
(A), the fair market value of such
contribution shall be determined--
(I) without regard to such
internal standards, such lack
of market, such circumstances,
or such exclusive purpose, and
(II) by taking into account
the price at which the same or
substantially the same food
items (as to both type and
quality) are sold by the
taxpayer at the time of the
contribution (or, if not so
sold at such time, in the
recent past).
* * * * * * *
VII. DISSENTING VIEWS
The six bills approved by the Republicans at the markup
would add $304 billion to the deficit. Combined with the $310
billion that the six bills approved by Republicans on the
Committee in April added to the deficit, Republicans have added
$614 billion to the deficit in two short months--and there does
not appear to be an end in sight. Even though some of these
bills were introduced individually with some bipartisan
support, the opposition to these bills was based on the
position that these tax provisions should not be made permanent
by adding to the deficit without any revenue offset.
To put the combined cost ($614 billion) into context, it is
25 percent more than the entire projected federal deficit this
year and $86 billion more than total non-defense domestic
discretionary spending (e.g., medical research, education,
veterans' pensions and health care, transportation, etc.) will
be in 2014. It is almost seven times what we spend annually on
education, job training, and social services. It is ten times
more than we spend on veterans. And, it is eleven times more
than we spend on medical research and public health.
Public charities and private foundations serve an important
role in our society. We all support the good works of the
charitable community and strive to provide charities with the
resources they need to carry out their charitable mission. The
markup was not to debate the good works of charities across
this country, or the merits of H.R. 4719 which makes permanent
the enhanced charitable deduction for contributions of food
inventory for non-C corporations.
We found it hypocritical that the Republicans would make
permanent a provision that was repealed in Chairman Camp's Tax
Reform Act of 2014 discussion draft (the ``Republican tax
reform plan''). Section 1403 of the Republican tax reform plan
repealed the enhanced deduction for charitable contributions of
food inventory.
We also found it hypocritical that, four months ago,
Republicans let emergency unemployment insurance expire for
more than 1.3 million Americans by arguing that an adequate
offset had yet to be proposed. In early April, the Senate came
to a bipartisan agreement on an offset after months of
painstaking negotiations. Yet House Republicans still refuse to
act.
Finally, we also opposed the manner in which Republicans
were proceeding--selecting 10 to make permanent without any
offset from the approximately 60 tax provisions that expired
last year. This approach was both fiscally irresponsible and
fundamentally hypocritical.
The consideration of this bill should have been part of the
consideration of all the expired tax provisions commonly
referred to as ``tax extenders.'' The Republicans did not take
up other tax extenders that also are important to Democratic
Committee Members. Left to an uncertain fate are provisions
like the Work Opportunity Tax Credit, the New Markets Tax
Credit, and the renewable energy tax credits, as well as the
long-term status of the Earned Income Tax Credit, the Child Tax
Credit, and the American Opportunity Tax Credit.
Sander M. Levin,
Ranking Member.