[Congressional Record Volume 149, Number 45 (Thursday, March 20, 2003)]
[Senate]
[Pages S4177-S4179]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HATCH:
  S. 680. A bill to amend the Internal Revenue Code of 1986 to enhance 
book donations and literacy; to the Committee on Finance.
  Mr. HATCH. Mr. President, I rise today to introduce legislation 
designed to clarify and enhance the charitable contribution tax 
deduction for donations of excess book inventory for educational 
purposes. This proposal would simplify a complex area of the current 
law and eliminate significant roadblocks that now stand in the way of 
businesses with excess book inventory to donating those books to 
schools, libraries, and literacy programs, where they are much needed.
  Unfortunately, our current tax law contains a major flaw when it 
comes to the donation of books that are excess inventory for publishers 
or booksellers. The tax benefits for donating such books to schools or 
libraries are often no greater than those of sending the books to the 
landfill. And, since it is generally cheaper and faster for a company 
to simply send the books to the dump, rather than go through the 
trouble and cost of finding donees, and of packing, storing, and 
shipping the books, it often ends up being more cost effective and 
easier for companies to truck the books to a landfill or recycling 
center.
  While there are provisions in the current law where a larger 
deduction is available for the donation of excess books, many companies 
have found that the complexity and uncertainty of dealing with the 
requirements, regulations, and possible Internal Revenue Service 
challenges of the higher deduction serve as a real disincentive to 
making a contribution.
  This is a sad situation, when one considers that many, if not most, 
of these books would be warmly welcomed by schools, libraries, and 
literacy programs.
  The heart of the problem is that under the current law, the higher 
deduction requires that the donated books be used only for the care of 
the needy, the sick, or infants. This requirement makes it difficult 
for schools to qualify as donees and also frequently prohibits 
libraries and adult literacy programs from receiving such deductions. 
This is because these schools, libraries, and literacy programs often 
serve those who are not needy or are over the age of 18. Further 
complicating the issue, the valuation of donated book inventory has 
been the subject of ongoing disputes between taxpayers and the IRS. The 
tax code should not contain obstacles that provide disincentives to 
charitable donations of books that can enhance learning.
  The bill I am introducing today addresses the obstacles of donating 
excess book inventory by providing a simple and clear rule whereby any 
donation of book inventory to a qualified school, library, or literacy 
program is eligible for the enhanced deduction. This means that 
booksellers and publishers would receive a higher tax benefit for 
donating the books rather than throwing them away and would thus be 
encouraged to go to the extra trouble and expense of seeking out 
qualified donees and making the contributions.
  My home State of Utah, like the rest of the Nation, has a problem 
with illiteracy. According to the National Institute for Literacy, 
between 21 and 23 percent of the adult population of the United States, 
about 44 million people, are only at Level 1 literacy, meaning they can 
read a little but not well enough to fill out an application, read a 
food label, or read a simple story to a child. Another 25 to 28 percent 
of the adult population, or between 45 and 50 million people, are 
estimated to be at Level 2 literacy, meaning they can usually can 
perform more complex tasks such as comparing, contrasting, or 
integrating pieces of information but usually not higher level reading 
and problem-solving skills. Literacy experts tell us that adults with 
skills at Levels 1 and 2 lack a sufficient foundation of basic skills 
to function successfully in our society.
  While this bill is not a cure-all for the tragedy of illiteracy, it 
will increase access to books, both for adults and for children. Our 
tax code should not encourage the destruction of perfectly good books 
while schools, libraries, and literacy programs go begging for them.
  The Senate is already on record in unanimous support of this bill. 
During the floor debate on the Economic Growth and Tax Relief 
Reconciliation Act of 2001, I offered this proposal as an amendment, 
which was accepted without opposition. Unfortunately, the provision was 
dropped in the conference with the House. Moreover, the Finance 
Committee has also approved this provision, having included it in S. 
476, the CARE Act, which is currently pending on the Senate calendar.
  The Joint Committee on Taxation estimates this provision would 
decrease revenues to the Treasury by $283 million over a ten-year 
period. This estimate helps demonstrate the extent of the value of the 
books that are currently being discarded that could be utilized to help 
America's adults and children.
  I hope our colleagues will join us in supporting this bill. It is 
wrong for our tax code to encourage book publishers to send books to 
the landfill instead of to the library. Let's correct this problem.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 680

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

[[Page S4179]]

     SECTION 1. CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF BOOK 
                   INVENTORIES.

       (a) In General.--Section 170(e)(3) of the Internal Revenue 
     Code of 1986 (relating to certain contributions of ordinary 
     income and capital gain property) is amended by redesignating 
     subparagraph (C) as subparagraph (D) and by inserting after 
     subparagraph (B) the following new subparagraph:
       ``(C) Special rule for contributions of book inventory for 
     educational purposes.--
       ``(i) Contributions of book inventory.--In determining 
     whether a qualified book contribution is a qualified 
     contribution, subparagraph (A) shall be applied without 
     regard to whether--

       ``(I) the donee is an organization described in the matter 
     preceding clause (i) of subparagraph (A), and
       ``(II) the property is to be used by the donee solely for 
     the care of the ill, the needy, or infants.

       ``(ii) Amount of reduction.--Notwithstanding subparagraph 
     (B), the amount of the reduction determined under paragraph 
     (1)(A) shall not exceed the amount by which the fair market 
     value of the contributed property (as determined by the 
     taxpayer using a bona fide published market price for such 
     book) exceeds twice the basis of such property.
       ``(iii) Qualified book contribution.--For purposes of this 
     paragraph, the term `qualified book contribution' means a 
     charitable contribution of books, but only if the 
     requirements of clauses (iv) and (v) are met.
       ``(iv) Identity of donee.--The requirement of this clause 
     is met if the contribution is to an organization--

       ``(I) described in subclause (I) or (III) of paragraph 
     (6)(B)(i), or
       ``(II) described in section 501(c)(3) and exempt from tax 
     under section 501(a) (other than a private foundation, as 
     defined in section 509(a), which is not an operating 
     foundation, as defined in section 4942(j)(3)), which is 
     organized primarily to make books available to the general 
     public at no cost or to operate a literacy program.

       ``(v) Certification by donee.--The requirement of this 
     clause is met if, in addition to the certifications required 
     by subparagraph (A) (as modified by this subparagraph), the 
     donee certifies in writing that--

       ``(I) the books are suitable, in terms of currency, 
     content, and quantity, for use in the donee's educational 
     programs, and
       ``(II) the donee will use the books in its educational 
     programs.

       ``(vi) Bona fide published market price.--For purposes of 
     this subparagraph, the term `bona fide published market 
     price' means, with respect to any book, a price--

       ``(I) determined using the same printing and edition,
       ``(II) determined in the usual market in which such a book 
     has been customarily sold by the taxpayer, and
       ``(III) for which the taxpayer can demonstrate to the 
     satisfaction of the Secretary that the taxpayer customarily 
     sold such books in arm's length transactions within 7 years 
     preceding the contribution of such a book.''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to contributions made after the date of the 
     enactment of this Act.

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