Imposition of tax on disposable carryout bags

(a)

General rule

Chapter 31 of the Internal Revenue Code of 1986 (relating to retail excise taxes) is amended by inserting after subchapter C the following new subchapter:

Disposable Carryout Bags

Sec. 4056. Imposition of tax.

4056.

Imposition of tax

(a)

General rule

There is hereby imposed on any retail sale a tax on each disposable carryout bag. (b)

Amount of tax

The amount of tax imposed by subsection (a) shall be $0.05 per disposable carryout bag. (c)

Liability for tax

The retailer shall be liable for the tax imposed by this section. (d)

Definitions

For purposes of this section— (1)

Disposable carryout bag

(A)

In general

The term disposable carryout bag means a bag of any material, commonly plastic or kraft paper, which is provided to a consumer at the point of sale to carry or cover purchases, merchandise, or other items. (B)

Exceptions

Such term does not include— (i)any reusable bag, (ii)any bag manufactured for use by a customer inside a store to package bulk items such as fruit, vegetables, nuts, grains, candy, or small hardware items, such as nails and bolts, (iii)any bag that contains or wraps frozen foods, prepared foods, or baked goods when not prepackaged, (iv)any bag manufactured for use by a pharmacist to contain prescription drugs, and (v)any bag manufactured to be sold at retail in packages containing multiple bags intended for use as garbage, pet waste, or yard waste bags. (2)

Reusable bag

The term reusable bag means a bag that is— (A)(i)made of cloth or other machine washable fabric, or (ii)made of a durable plastic that is at least 2.25 millimeters thick, and (B)is specifically designed and manufactured for multiple use. (e)

Special rules

(1)

Pass through of tax

The tax imposed by subsection (a) shall be passed through to the customer and shall be separately stated on the receipt of sale provided to the customer. (2)

1st retail sale; use treated as sale

For purposes of this section, rules similar to the rules of subsections (a) and (b) of section 4002 shall apply.

(b)

Carryout bag recycling program

Subchapter B of chapter 65 of such Code is amended by adding at the end the following new section:

6433.

Qualified disposable carryout bag recycling program

(a)

Allowance of credit

If— (1)tax has been imposed under section 4056 on any disposable carryout bag, (2)a retailer provides such bag to a customer in a point of sale transaction, (3)such retailer has in effect at the time of such transaction a qualified carryout bag recycling program, and (4)such retailer has kept and can produce records for purposes of this section and section 4056 that include the total number of disposable carryout bags purchased and the amounts passed through to the customer for such bags pursuant to section 4056(e),

the Secretary shall pay (without interest) to such retailer an amount equal to the applicable amount for each such bag used by the retailer in connection with a point of sale transaction.

(b)

Applicable amount

For purposes of subsection (a), the applicable amount is $0.01. (c)

Qualified disposable carryout bag recycling program

For purposes of this section— (1)

In general

The term qualified carryout bag recycling program means a recycling program under which the retailer— (A)to the extent the retailer provides disposable carryout bags (as defined in section 4056) to customers— (i)passes through the tax imposed by section 4056 and tracks the total number of bags purchased and amount of tax passed through pursuant to section 6433(a), (ii)has printed or displayed on each such bag, in a manner clearly visible to a customer, the words PLEASE RETURN TO A PARTICIPATING STORE FOR RECYCLING, (iii)uses bags that are 100 percent recyclable, (iv)uses bags that are made of high-density polyethylene film marked with the SPI resin identification code 2 or low-density polyethylene film marked with the SPI resin identification code 4, and (v)uses bags that contain a minimum of 40 percent post-consumer recycled content, (B)places at each place of business at which retail operations are conducted one or more carryout bag collection bins which are visible, easily accessible to the customer, and clearly marked as being for the purpose of collecting and recycling disposable carryout bags, (C)recycles the disposable carryout bags collected pursuant to subparagraph (B), (D)maintains for not less than 3 years records (which shall be available to the Secretary) describing the collection, transport, and recycling of disposable carryout bags collected, (E)makes available to customers within the retail establishment reusable bags (as defined in section 4056(c)(2)) which may be purchased and used in lieu of using a disposable carryout bag, and (F)meets the definition of 4056(d)(3). (2)

Recycling program

The term recycling program means a program that processes used materials or waste materials into new products to prevent waste of potentially useful materials; reduce raw materials consumption; reduce energy usage; reduce air, water, or other pollution; or reduce the need for disposal.

(c)

Establishment of trust fund

Subchapter A of chapter 98 of such Code (relating to trust fund code) is amended by adding at the end the following:

9512.

Disposable carryout bag trust fund

(a)

Creation of trust fund

There is established in the Treasury of the United States a trust fund to be known as the Disposable carryout bag Trust Fund (referred to in this section as the Trust Fund), consisting of such amounts as may be appropriated or credited to the Trust Fund as provided in this section or section 9602(b). (b)

Transfers to trust fund

There is hereby appropriated to the Trust Fund an amount equivalent to the amounts received in the Treasury pursuant to section 4056. (c)

Expenditures from trust fund

Amounts in the Trust Fund shall be available, as provided by appropriation Acts, for making payments under section 6433. (d)

Transfer to land and water conservation fund

(1)

In general

The Secretary shall pay from time to time from the Trust Fund into the land and water conservation fund provided for in title I of the Land and Water Conservation Fund Act of 1965 amounts (as determined by the Secretary) equivalent to the aggregate of the transactions on which tax is imposed under section 4056 aggregate amounts determined on the basis of $0.04. (2)

Special rule regarding amounts transferred

Amounts transferred to the land and water conservation fund under paragraph (1) shall not be taken into account for purposes of determining amounts to be appropriated or credited to the fund under section 2(c) of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 460l–5(c)).

(d)

Study

Not later than December 31, 2015, the Comptroller General of the United States shall conduct a study on the effectiveness of the provisions of this Act at reducing the use of disposable carryout bags and encouraging recycling of such bags. The report shall— (1)address measures that the Comptroller General determines may increase the effectiveness of such provisions, including the amount of tax imposed on each disposable carryout bag, and (2)any effects, both positive and negative, on any United States businesses. The Comptroller General shall submit a report of such study to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate. (e)

Clerical amendments

(1)The table of subchapters for chapter 31 of such Code is amended by inserting after the item relating to adding at the end thereof the following new item:

Subchapter D. Disposable carryout bags.

(2)The table of sections for subchapter B of chapter 65 of such Code is amended by adding at the end the following new item:

Sec. 6433. Qualified disposable carryout bag recycling program.

(3)The table of sections for subchapter A of chapter 98 of such Code is amended by adding at the end the following new item:

Sec. 9512. Disposable carryout bag trust fund.

(f)

Effective date

The amendments made by this section shall take effect on January 1, 2014.