H.R. 8717 - Feed America by Incentivizing Rural (FAIR) Meat Packing Act

116TH CONGRESS
2D SESSION

H.R. 8717

To amend the Internal Revenue Code of 1986 to provide incentives for livestock processing facilities.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 30, 2020

Mr. SMITH of Missouri (for himself, Mrs. WAGNER, Mrs. HARTZLER, Mr. LUETKEMEYER, Mr. GRAVES of Missouri, Mr. LONG, Mr. JOHNSON of South Dakota, Mr. HAGEDORN, and Mr. CRAWFORD) 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 provide incentives for livestock processing facilities.

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 "Feed America by Incentivizing Rural Meat Packing Act" or as the "FAIR Meat Packing Act".

SEC. 2. CREDIT FOR LIVESTOCK PROCESSING FACILITIES.

(a) IN GENERAL. — Subpart E of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 48C the following new section:

"SEC. 48D. LIVESTOCK PROCESSING FACILITIES CREDIT.

"(a) IN GENERAL. — For purposes of section 46, the livestock processing facilities credit for any taxable year is an amount equal to 25 percent of the basis of each livestock processing facility property placed in service by the taxpayer during such taxable year.

"(b) LIMITATION ON CREDIT AMOUNT. — The credit determined under subsection (a) with respect to any taxpayer for any taxable year shall not exceed $250,000.

"(c) EXCLUSION OF CERTAIN LARGE PROCESSORS. — No credit shall be allowed under subsection (a) to any taxpayer for any taxable year if the gross receipts (within the meaning of section 448(c) of the Internal Revenue Code of 1986) of such taxpayer for such taxable year exceed $100,000,000.

"(d) LIVESTOCK PROCESSING FACILITY PROPERTY. — For purposes of this section —

"(1) IN GENERAL. — The term 'livestock processing facility property' means property with respect to which depreciation (or amortization in lieu of depreciation) is allowable and which is part of a livestock processing facility.

"(2) TRADE OR BUSINESS REQUIREMENT. — The term 'livestock processing facility property' shall not include any property unless such property is used in the taxpayer's trade or business of processing livestock.

"(e) OTHER DEFINITIONS. — For purposes of this section —

"(1) LIVESTOCK PROCESSING FACILITY. — The term 'livestock processing facility' means a facility which slaughters livestock for processing into meat and meat products, which participates in a meat and poultry inspection program conducted by the Department of Agriculture or the State in which such facility is located, and at which an average of fewer than 500 employees are employed on business days during the taxable year. Such term shall include any property used for the intake or storage of livestock, the disposal or management of livestock waste, or the packaging, handling, warehousing, or storage of meat products, if such property is located on the same site as such facility.

"(2) LIVESTOCK. — The term 'livestock' means cattle, sheep, goats, bison, swine, and poultry.

"(f) SPECIAL RULES. —

"(1) CERTAIN PROGRESS EXPENDITURE RULES MADE APPLICABLE. — Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of subsection (a).

"(2) AGGREGATION RULE. — For purposes of subsections (b) and (c), all members of the same controlled group of corporations (within the meaning of section 267(f)) and all persons under common control (within the meaning of section 52(b) but determined by treating an interest of more than 50 percent as a controlling interest) shall be treated as 1 person and the dollar limitation under subsection (b) shall be allocated in such manner as the Secretary may provide.

"(3) ELECTION TO NOT HAVE SECTION APPLY. — No credit shall be determined under subsection (a) with respect to any taxpayer for any taxable year if such taxpayer make an election under this paragraph (at such time and in such manner as the Secretary may provide) to have such subsection not apply for such taxable year.

"(g) TERMINATION. — No credit shall be allowed under subsection (a) with respect to any taxable year beginning after December 31, 2025.".

(b) CONFORMING AMENDMENTS. —

(1) Section 46 of such Code is amended by striking "and" at the end of paragraph (5), by striking the period at the end of paragraph (6) and inserting ", and", and by adding at the end the following new paragraph:

"(7) the livestock processing facilities credit.".

(2) Section 49(a)(1)(C) of such Code is amended by striking "and" at the end of clause (iv), by striking the period at the end of clause (v) and inserting a comma, and by adding at the end the following new clause:

"(vi) the basis of any livestock processing facility property under section 48D.".

(3) Section 50(a)(2)(E) of such Code is amended by striking " or 48C(b)(2)" and inserting "48C(b)(2), or 48D(d)(1)".

(4) The table of sections for subpart E of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 48C the following new item:

"Sec. 48D. Livestock processing facilities credit.".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to periods after the date of the enactment of this Act under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

SEC. 3. REFUNDABLE CREDIT FOR STARTUP AND ORGANIZATIONAL EXPENDITURES WITH RESPECT TO LIVESTOCK PROCESSING FACILITIES.

(a) IN GENERAL. — Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 36B the following new section:

"SEC. 36C. CREDIT FOR STARTUP AND ORGANIZATIONAL EXPENDITURES OF LIVESTOCK PROCESSING FACILITIES.

"(a) IN GENERAL. — There shall be allowed as a credit against the tax imposed by this subtitle for any taxable year an amount equal to 90 percent of the sum of —

"(1) the qualified livestock processing facility start-up expenditures of the taxpayer for such taxable year,

"(2) the qualified livestock processing facility corporate organizational expenditures of the taxpayer for such taxable year, plus

"(3) the qualified livestock processing facility partnership organizational expenditures of the taxpayer for such taxable year.

"(b) QUALIFIED LIVESTOCK PROCESSING FACILITY START-UP EXPENDITURES. — For purposes of this section, the term 'qualified livestock processing facility start-up expenditures' means, with respect to any taxpayer for any taxable year, the amount which would be allowed as a deduction under section 195 to such taxpayer for such taxable year with respect to any trade or business which slaughters livestock into meat or meat products if —

"(1) section 195(b)(1)(A)(ii) were applied —

"(A) by substituting '$10,000' for '$5,000', and

"(B) by substituting '$60,000' for '$50,000', and

"(2) subsection (f) of this section did not apply.

"(c) QUALIFIED LIVESTOCK PROCESSING FACILITY CORPORATE ORGANIZATIONAL EXPENDITURES. — For purposes of this section, the term 'qualified livestock processing facility corporate organizational expenditures' means, with respect to any taxable year of any corporation substantially all of the gross receipts (within the meaning of section 448(c) of the Internal Revenue Code of 1986) of which are reasonably expected to be derived from a trade or business which slaughters livestock into meat or meat products, the amount which would be allowed as a deduction under section 248 to such corporation for such taxable year if —

"(1) section 248(a)(1)(B) were applied —

"(A) by substituting '$10,000' for '$5,000', and

"(B) by substituting '$60,000' for '$50,000',

"(2) in the case of any entity with a single owner that is disregarded as an entity separate from its owner, section 248 were applied as if such entity were a corporation, and

"(3) subsection (f) of this section did not apply.

"(d) QUALIFIED LIVESTOCK PROCESSING FACILITY PARTNERSHIP ORGANIZATIONAL EXPENDITURES. — For purposes of this section, the term 'qualified livestock processing facility partnership organizational expenditures' means, with respect to any taxable year of any partnership substantially all of the gross receipts (within the meaning of section 448(c) of the Internal Revenue Code of 1986) of which are reasonably expected to be derived from a trade or business which slaughters livestock into meat or meat products, the amount which would be allowed as a deduction under section 709 with respect to such partnership for such taxable year if —

"(1) section 709(b)(1)(A)(ii) were applied —

"(A) by substituting '$10,000' for '$5,000', and

"(B) by substituting '$60,000' for '$50,000', and

"(2) subsection (f) of this section did not apply.

"(e) LIVESTOCK. — For purposes of this section, the term 'livestock' means cattle, elk, reindeer, bison, deer, sheep, goats, swine, and poultry.

"(f) DENIAL OF DOUBLE BENEFIT. — Any deduction or credit allowed under this title (other than this section) with respect to any qualified livestock processing facility start-up expenditures, qualified livestock processing facility corporate organizational expenditures, or qualified livestock processing facility partnership organizational expenditures shall be reduced by the amount of the credit determined under this section.

"(g) RECAPTURE. — If any credit is allowed under this section to any taxpayer for any taxable year with respect to any trade or business of processing livestock (including with respect to any entity substantially all of the gross receipts of which are with respect to the trade or business of processing of livestock) and such trade or business ceases to be conducted during the 3-taxable-year period following the taxable in which such credit is so allowed, the tax imposed under this chapter on such taxpayer for the taxable year in which such trade or business ceases shall be increased by the amount of the credit so allowed.

"(h) TERMINATION. — No credit shall be allowed under subsection (a) with respect to any taxable year beginning after December 31, 2025.".

(b) CONFORMING AMENDMENTS. —

(1) Section 6211(b)(4)(A) of such Code is amended by inserting "36C," after "36B,".

(2) Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting "36C," after "36B,".

(3) The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 36B the following new item:

"Sec. 36C. Credit for startup and organizational expenditures of livestock processing facilities.".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable year ending after the date of the enactment of this Act.