Firm Seeks Guidance on Treatment of Charitable Contributions Costs

May 10, 2017

Courier's Desk
Internal Revenue Service
Attn: CC:PA:LPD:PR (Notice 2017-28)
1111 Constitution Avenue, N.W.
Washington, D.C. 20224

Re: Recommendation for the 2017-2018 Priority Guidance Plan Pursuant to Notice 2017-28

To Whom It May Concern:

Pursuant to Notice 2017-28, 2017-19 I.R.B., 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 2015-2016 Priority Guidance Plan and the 2016-2017 Priority Guidance Plan.² Specifically, it is respectfully requested that if guidance with respect to the Section 170(e)(3) Project is not issued by the June 2017 end of the 2016-2017 Priority Guidance Plan year, that the Treasury Department and the Internal Revenue Service (the "IRS") retain this important project on the 2017-2018 Priority Guidance Plan.

The Treasury Department and the IRS included the Section 170(e)(3) Project on the 2015-2016 Priority Guidance Plan and the 2016-2017 Priority Guidance Plan.³ The requested guidance would clarify the treatment of current year acquisition costs with respect to charitable contributions of inventory and other property as cost of goods sold (and, therefore, not classified and deducted as a charitable contribution) under current law. 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 note that in contrast to prior requests for project recommendations for the Priority Guidance Plan, Notice 2017-28 contains a new criterion for selecting projects for inclusion on the 2017-2018 Priority Guidance Plan. Specifically, Notice 2017-28 provides that the Treasury Department and the IRS will consider "[w]hether the recommended guidance would be in accordance with Executive Order 13771, Executive Order 13777 . . ., or other executive orders" because such executive orders "may affect the number or type of guidance projects that may be issued during the 2017-2018 plan year." The executive orders cited by Notice 2017-28 constitute portions of the administration's regulatory reform agenda. It is respectfully submitted that the Section 170(e)(3) Project is not only in accordance with, but supports and furthers, this regulatory reform agenda. The Section 170(e)(3) Project would confirm and clarify the treatment of charitable contributions of food inventory and other property which will reduce the recordkeeping and compliance burdens for taxpayers. The requested guidance will also foster and encourage much needed donations to 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 and are hopeful that such guidance will be issued prior to the June 2017 end of the 2016-2017 Priority Guidance Plan year. Furthermore, we assume that if such guidance is not issued by the end of the plan year, the project would as a matter of ordinary course be included on the 2017-2018 Priority Guidance Plan. In light of the resource constraints on the Treasury Department and the IRS that impact the development of the requested guidance as well as on the composition of the 2017-2018 Priority Guidance Plan, we wanted to reaffirm our interest and support for the Section 170(e)(3) Project and its inclusion, if necessary, on the 2017-2018 Priority Guidance Plan.

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 Chartered
Washington, DC

cc:
Thomas West
Christopher Call
Elinor Ramey
Karla Meola