[Congressional Record Volume 143, Number 69 (Thursday, May 22, 1997)]
[Senate]
[Page S5009]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DASCHLE:
  S. 790. A bill to amend the Internal Revenue Code of 1986 to allow 
Indian tribes to receive charitable contributions of inventory; to the 
Committee on Finance.


   Charitable Contributions of Inventory to Indian Tribes legislation

  Mr. DASCHLE. Mr. President, I am pleased to introduce legislation to 
expand the current inventory charitable donation rule to include Indian 
tribes. This proposal is short and simple.
  Under current law, companies may obtain a special charitable donation 
tax deduction under Internal Revenue Code section 170(e)(3) for 
contributing their excess inventory to the ill, the needy, or infants. 
While not limited to any particular type of company or inventory, this 
deduction commonly is used by food processing companies whose excess 
food inventories otherwise would spoil. Indian tribes have had 
difficulty obtaining these donations, however, because of an ambiguity 
in the law as to whether or not donating companies may deduct donations 
to organizations on Indian reservations.
  The current language in section 170(e)(3) requires charitable 
donations of excess inventory to be made to organizations that are 
described in section 501(c)(3) of the Code and exempt from taxation 
under section 501(a). While Indian tribes are exempt from taxation, 
they are not among the organizations described in section 501(c)(3). 
Accordingly, it is not clear that a direct donation of excess inventory 
to an Indian tribe would qualify for the charitable donation deduction 
under section 170(e)(3).
  Ironically, the Indian Tribal Government Tax Status Act found in 
section 7871 provides that an Indian tribal government shall be treated 
as a State for purposes of determining tax deductibility of charitable 
contributions made pursuant to section 170. Unfortunately, the act does 
not expressly extend to donations made under section 170(e)(3) because 
that provision technically does not include States as eligible donees.
  Mr. President, it is well documented that Native Americans, like 
other citizens, may meet the qualifications for this special charitable 
donation. No one would argue that it is not within the intent of 
section 170(e)(3) to allow contributions to Native American 
organizations to qualify for the special charitable donation deduction 
in that section of the code. The bill I am introducing today simply 
would allow those contributions to qualify for the deduction. By 
allowing companies to make qualified contributions to Indian tribes 
under section 170(e)(3), the bill would clearly further the intended 
purpose of both Internal Revenue Code section 170(e)(3) and the Indian 
Tribal Government Tax Status Act.
  The appropriateness of the measure is exhibited by the fact that it 
was included in the Revenue Act of 1992 (H.R. 11), which was vetoed for 
unrelated reasons. At that time, the measure was supported on policy 
grounds by the staffs of the joint committee on Taxation and Finance 
Committee. In 1995, the joint committee estimated that the proposal 
would have a negligible effect on Federal receipts over the 6-year 
period it estimated.
  I strongly encourage my colleagues to support this bill and ask 
unanimous consent that its text be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 790

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

     SECTION 1. CHARITABLE CONTRIBUTIONS OF INVENTORY TO INDIAN 
                   TRIBES.

       (a) In General.--Section 170(e)(3) of the Internal Revenue 
     Code of 1986 (relating to a special rule for certain 
     contributions of inventory or other property) is amended by 
     adding at the end the following new subparagraph:
       ``(D) Special rule for Indian tribes.--
       ``(i) In general.--An Indian tribe (as defined in section 
     7871(c)(3)(E)(ii)) shall be treated as an organization 
     eligible to be a donee under subparagraph (A).
       ``(ii) Use of property.--For purposes of subparagraph 
     (A)(i), if the use of the property donated is related to the 
     exercise of an essential governmental function of the Indian 
     tribal government, such use shall be treated as related to 
     the purpose or function constituting the basis for the 
     organization's exemption.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1996.
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