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Guidance on Charitable Contributions Costs Needed Now, Firm Says

APR. 29, 2021

Guidance on Charitable Contributions Costs Needed Now, Firm Says

DATED APR. 29, 2021
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April 29, 2021

Internal Revenue Service
Attn: CC:PA:LPD:PR (Notice 2021-28)
Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, D.C. 20224

Re: Recommendation for the 2021-2022 Priority Guidance Plan Pursuant to Notice 2021-28

To Whom It May Concern:

Pursuant to Notice 2021-28, 2021-18 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 2020-2021 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 30, 2021 end of the 2020-2021 Priority Guidance Plan year as intended, the Treasury Department and the Internal Revenue Service (the "IRS") retain this important project on the 2021-2022 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 as a result of the continuing impact of the coronavirus pandemic.4

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 priority guidance plan since 2015-2016 and its designation in more recent priority guidance plans as a higher priority “burden reduction” project.5 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 2021-2022 Priority Guidance Plan in the event that guidance is not issued prior to the June 30, 2021 end of the 2020-2021 Priority Guidance Plan year.

* * * * *

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

Enclosure

cc:
Thomas C. West, Jr., Esq. Deputy Assistant Secretary for Domestic Business Tax, Office of Tax Policy
Krishna P. Vallabhaneni, Esq. Tax Legislative Counsel, Office of Tax Policy
William M. Paul, Esq. Chief Counsel, Internal Revenue Service
John P. Moriarty, Esq. Associate Chief Counsel (IT&A), Internal Revenue Service
Karla Meola, Esq. Special Counsel to the Associate Chief Counsel (IT&A), Internal Revenue Service

FOOTNOTES

1All section references are to the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder, unless otherwise specified.

2Department of the Treasury, 2020-2021 Priority Guidance Plan, at 8 (Nov. 17, 2020). The Section 170(e)(3) Project was also contained on the 2015-2016 Priority Guidance Plan, the 2016-2017 Priority Guidance Plan, the 2017-2018 Priority Guidance Plan and the 2018-2019 Priority Guidance Plan. See Department of the Treasury, 2015-2016 Priority Guidance Plan, at 12 (July 31, 2015); Department of the Treasury, 2016-2017 Priority Guidance Plan, at 12 (Aug. 15, 2016); Department of the Treasury, 2017-2018 Priority Guidance Plan, at 4 (Oct. 20, 2017); Department of the Treasury, 2018-2019 Priority Guidance Plan, at 10 (Nov. 8, 2018); Department of the Treasury, 2019-2020 Priority Guidance Plan, at 8 (Oct. 8, 2019).

3See, e.g., "Guidance Requested on Treatment of Charitable Contribution Costs," 2014 TNT 88-20 (Apr. 30, 2014) (copy enclosed).

4Feeding America, The Impact of the Coronavirus on Food Insecurity in 2020 & 2021 (Mar. 2021) (projecting that 42. million people in the United States, including 13 million children, may experience food insecurity in 2021 as a result of the continuing impact of the coronavirus pandemic).

5In this regard, the Section 170(e)(3) Project was one of the guidance projects selected as a priority on the 2017-2018 Priority Guidance Plan for "Near-Term Burden Reduction" as one of "certain projects that [the Treasury Department and the IRS] have identified as burden reducing and that [the Treasury Department and the IRS] believe[s] can be completed in the 8 ½ months remaining in the plan year." Department of the Treasury, 2017-2018 Priority Guidance Plan, at 1, 4 (Oct. 20, 2017). Similarly, the Section 170(e)(3) Project was selected as a “burden reduction” project on the 2018-2019 Priority Guidance Plan, the 2019-2020 Priority Guidance Plan and the 2020-2021 Priority Guidance Plan. Department of the Treasury, 2018-2019 Priority Guidance Plan, at 10 (Nov. 8, 2018); Department of the Treasury, 2019-20 Priority Guidance Plan, at 8 (Oct. 8, 2019); Department of the Treasury, 2020-2021 Priority Guidance Plan, at 8 (Nov. 17, 2020).

END FOOTNOTES

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