[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3951 Introduced in House (IH)]

103d CONGRESS
  2d Session
                                H. R. 3951

       To amend the Internal Revenue Code of 1986 to prevent the 
  reclassification of certain dues paid to tax-exempt agricultural or 
                      horticultural organizations.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 3, 1994

   Mr. Camp (for himself, Mr. Brewster, Mr. Archer, Mr. Grandy, Mr. 
  Hoagland, Mr. Sundquist, Mr. Payne of Virginia, Mr. Doolittle, Mr. 
Boehner, Mr. Quillen, Mr. Hansen, Mr. Canady, Mr. Barlow, Mr. Barcia of 
  Michigan, Mr. Bunning, Mr. Hancock, Mr. Slattery, Mr. McCrery, Mr. 
Thomas of California, Mr. Houghton, Mr. Edwards of Texas, Mr. Shaw, Mr. 
Herger, Mr. Pete Geren of Texas, Mr. Lewis of Florida, Mr. Bonilla, Mr. 
    Lightfoot, Mr. Gordon, and Mr. Fields of Texas) introduced the 
 following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
       To amend the Internal Revenue Code of 1986 to prevent the 
  reclassification of certain dues paid to tax-exempt agricultural or 
                      horticultural organizations.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Tax Fairness for Agriculture Act of 
1994''.

SEC. 2. TREATMENT OF DUES PAID TO AGRICULTURAL OR HORTICULTURAL 
              ORGANIZATIONS.

    (a) General Rule.--Section 512 of the Internal Revenue Code of 1986 
(defining unrelated business taxable income) is amended by adding at 
the end thereof the following new subsection:
    ``(d) Treatment of Dues of Agricultural or Horticultural 
Organizations.--
            ``(1) In general.--If--
                    ``(A) an agricultural or horticultural organization 
                described in section 501(c)(5) requires annual dues to 
                be paid in order to be a member of such organization, 
                and
                    ``(B) the amount of such required annual dues does 
                not exceed $75,
        in no event shall any portion of such dues be treated as 
        derived by such organization from an unrelated trade or 
        business by reason of any benefits or privileges to which 
        members of such organization are entitled.
            ``(2) Indexation of $75 amount.--In the case of any taxable 
        year beginning in a calendar year after 1994, the $75 amount in 
        paragraph (1) shall be increased by an amount equal to--
                    ``(A) $75, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, by substituting `calendar year 
                1993' for `calendar year 1992' in subparagraph (B) 
                thereof.''
    (b) Effective Dates.--
            (1) In general.--The amendment made by subsection (a) shall 
        apply to taxable years beginning after December 31, 1993.
            (2) Transitional rule.--If--
                    (A) for purposes of applying part III of subchapter 
                F of chapter 1 of the Internal Revenue Code of 1986 to 
                any taxable year beginning before January 1, 1994, an 
                agricultural or horticultural organization did not 
                treat any portion of membership dues received by it as 
                income derived in an unrelated trade or business, and
                    (B) such organization had a reasonable basis for 
                not treating such dues as income derived in an 
                unrelated trade or business,
        then, for purposes of applying such part III to any such 
        taxable year, in no event shall any portion of such dues be 
        treated as derived in an unrelated trade or business.
            (3) Reasonable basis.--For purposes of paragraph (2), an 
        organization shall be treated as having a reasonable basis for 
        not treating membership dues as income derived in an unrelated 
        trade or business if the taxpayer's treatment of such dues was 
        in reasonable reliance on any of the following:
                    (A) Judicial precedent, published rulings, 
                technical advice with respect to the organization, or a 
                letter ruling to the organization.
                    (B) A past Internal Revenue Service audit of the 
                organization in which there was no assessment 
                attributable to the reclassification of membership dues 
                for purposes of the tax on unrelated business income.
                    (C) Long-standing recognized practice of 
                agricultural or horticultural organizations.

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