Firm Presses for Clarity on Charitable Contributions Costs

July 1, 2020

Internal Revenue Service
Attn: CC:PA:LPD:PR (Notice 2020-47)
Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, D.C. 20224

Re: Recommendation for the 2020-2021 Priority Guidance Plan Pursuant to Notice 2020-47

To Whom It May Concern:

Pursuant to Notice 2020-47, 2020-27 I.R.B. 1, Miller & Chevalier Chartered respectfully submits the following request with respect to the current project "[g]uidance under §170(e)(3)¹ regarding charitable contributions of inventory" (the "Section 170(e)(3) Project") as contained on the 2019-2020 Priority Guidance Plan.² Specifically, it is respectfully requested that since guidance with respect to the Section 170(e)(3) Project was not issued by the June 30, 2020 end of the 2019-2020 Priority Guidance Plan year as intended, that the Treasury Department and the Internal Revenue Service (the "IRS") retain this important project on the 2020-2021 Priority Guidance Plan.

The requested guidance under the Section 170(e)(3) Project would clarify the treatment of current year acquisition costs with respect to charitable contributions of inventory and other property as cost of goods sold under current law (and, therefore, not classified and deducted as a charitable contribution).³ Such guidance will provide certainty that, consistent with the existing regulatory charitable contribution regime, donors of inventory and other property for the benefit of the ill, the needy, or infants will under all circumstances (i) be allowed to recover their basis in contributed inventory or other property, and (ii) be able to compute the enhanced deduction “bump” available under Section 170(e)(3). This guidance is particularly important to ensure that Section 170(e)(3) works as intended for donors to make contributions of currently purchased food in order to satisfy the increased demand on food banks and other hunger relief agencies.

We understand, and greatly appreciate, that the Treasury Department and the IRS have devoted significant time and resources to developing guidance with respect to the Section 170(e)(3) Project which is reflected in its inclusion in every PGP since 2015-2016 and its designation in more recent PGPs as a higher priority “burden reduction” project.⁴ Thus, in light of the significant work that has already been completed with respect to the Section 170(e)(3) Project, we respectfully request that the project be carried over to the 2020-2021 Priority Guidance Plan.

We note that we recently submitted a request that guidance with respect to the Section 170(e)(3) Project be expedited, as such guidance is particularly important to ensure that Section 170(e)(3) works as intended for donors to make contributions of currently purchased food in order to satisfy the increased demand on food banks and other hunger relief agencies in light of the coronavirus crisis.⁵

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Thank you in advance for your consideration of this request. We appreciate the opportunity to submit this request and would welcome the opportunity to meet with the Treasury Department and the IRS to discuss it in greater detail or to answer any questions that you may have.

Respectfully submitted,

Marc J. Gerson

George A. Hani

Miller & Chevalier
Washington, DC