I 

114TH CONGRESS 

1ST SESSION H. R. 3977 

To amend the Internal Revenue Code of 1986 to impose a retail tax on 

carryout bags, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 5, 2015 

Mr. LOWENTHAL (for himself, Mr. BEYER, Mr. BLUMENAUER, Mr. FARR, Ms. 

LEE, and Mr. TED LIEU of California) introduced the following bill; 

which was referred to the Committee on Ways and Means, and in addition to the Committee on Natural Resources, for a period to be subsequently determined by the Speaker, in each case for consideration of such 

provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend the Internal Revenue Code of 1986 to impose 

a retail tax on carryout bags, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Trash Reduction Act 

5 of 2015’’. 

6 SEC. 2. IMPOSITION OF TAX ON CARRYOUT BAGS. 

7 (a) GENERAL RULE.—Chapter 31 of the Internal 

8 Revenue Code of 1986 (relating to retail excise taxes) is 

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1 amended by inserting after subchapter C the following new 

2 subchapter: 

3 ‘‘Subchapter D—Carryout Bags 

‘‘Sec. 4056. Imposition of tax. 

4 ‘‘SEC. 4056. IMPOSITION OF TAX. 

5 ‘‘(a) GENERAL RULE.—There is hereby imposed on 

6 any retail sale a tax on each carryout bag. 

7 ‘‘(b) AMOUNT OF TAX.—The amount of tax imposed 

8 by subsection (a) shall be $0.10 per carryout bag. 

9 ‘‘(c) LIABILITY FOR TAX.—The retailer shall be liable 

10 for the tax imposed by this section. 

11 ‘‘(d) DEFINITIONS.—For purposes of this section— 

12 ‘‘(1) CARRYOUT BAG.— 

13 ‘‘(A) IN GENERAL.—The term ‘carryout 

14 bag’ means a bag of any material, commonly 

15 plastic or kraft paper, which is provided to a 

16 consumer at the point of sale to carry or cover 

17 purchases, merchandise, or other items. 

18 ‘‘(B) EXCEPTIONS.—Such term does not 

19 include— 

20 ‘‘(i) any reusable bag that is distrib21 uted to a customer without charge during 

22 a limited duration promotional event, 

23 ‘‘(ii) any bag manufactured for use by 

24 a customer inside a store to package bulk 

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1 items such as fruit, vegetables, nuts, 

2 grains, candy, or small hardware items, 

3 such as nails and bolts, 

4 ‘‘(iii) any bag that contains or wraps 

5 frozen foods, prepared foods, or baked 

6 goods when not prepackaged, 

7 ‘‘(iv) any bag manufactured for use by 

8 a pharmacist to contain prescription drugs, 

9 and 

10 ‘‘(v) any bag manufactured to be sold 

11 at retail in packages containing multiple 

12 bags intended for use as garbage, pet 

13 waste, or yard waste bags. 

14 ‘‘(2) REUSABLE BAG.—The term ‘reusable bag’ 

15 means a bag that is— 

16 ‘‘(A)(i) made of cloth or other machine 

17 washable fabric, or 

18 ‘‘(ii) made of a durable plastic that is at 

19 least 2.25 millimeters thick, and 

20 ‘‘(B) is specifically designed and manufac21 tured for multiple use. 

22 ‘‘(3) LIMITED DURATION PROMOTIONAL

23 EVENT.—A limited duration promotional event shall 

24 not be treated as including any day in a calendar 

25 year if limited duration promotional events taken 

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1 into account under paragraph (1)(B)(i) have oc2 curred on 7 or more preceding days during such cal3 endar year. 

4 ‘‘(e) SPECIAL RULES.— 

5 ‘‘(1) PASS THROUGH OF TAX.—The tax im6 posed by subsection (a) shall be passed through to 

7 the customer and shall be separately stated on the 

8 receipt of sale provided to the customer. 

9 ‘‘(2) 1ST RETAIL SALE; USE TREATED AS

10 SALE.—For purposes of this section, rules similar to 

11 the rules of subsections (a) and (b) of section 4002 

12 shall apply.’’. 

13 (b) PLASTIC CARRYOUT BAG RECYCLING PRO14 GRAM.—Subchapter B of chapter 65 of such Code is 

15 amended by adding at the end the following new section: 

16 ‘‘SEC. 6433. QUALIFIED PLASTIC CARRYOUT BAG RECY17 CLING PROGRAM. 

18 ‘‘(a) ALLOWANCE OF CREDIT.—If— 

19 ‘‘(1) tax has been imposed under section 4056 

20 on any carryout bag, 

21 ‘‘(2) a retailer provides such bag to a customer 

22 in a point of sale transaction, 

23 ‘‘(3) in the case of a carryout bag made of 

24 paper, such paper consists of not less than 40 per25 cent post-consumer recycled content, 

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1 ‘‘(4) such retailer has in effect at the time of 

2 such transaction a qualified plastic carryout bag re3 cycling program, and 

4 ‘‘(5) such retailer has kept and can produce 

5 records for purposes of this section and section 4056 

6 that include the total number of carryout bags pur7 chased and the amounts passed through to the cus8 tomer for such bags pursuant to section 4056(e), 

9 the Secretary shall pay (without interest) to such retailer 

10 an amount equal to the applicable amount for each such 

11 bag used by the retailer in connection with a point of sale 

12 transaction. 

13 ‘‘(b) APPLICABLE AMOUNT.—For purposes of sub14 section (a), the applicable amount is $0.04. 

15 ‘‘(c) QUALIFIED PLASTIC CARRYOUT BAG RECY16 CLING PROGRAM.—For purposes of this section— 

17 ‘‘(1) IN GENERAL.—The term ‘qualified plastic 

18 carryout bag recycling program’ means a recycling 

19 program under which the retailer— 

20 ‘‘(A) to the extent the retailer provides 

21 carryout bags (as defined in section 4056) 

22 made of plastic to customers— 

23 ‘‘(i) passes through the tax imposed 

24 by section 4056 and tracks the total num25 ber of bags purchased and amount of tax 

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1 passed through pursuant to section 

2 6433(a), 

3 ‘‘(ii) has printed or displayed on each 

4 such bag, in a manner clearly visible to a 

5 customer, the words ‘PLEASE RETURN 

6 TO A PARTICIPATING STORE FOR 

7 RECYCLING’, 

8 ‘‘(iii) uses bags that are 100-percent 

9 recyclable, and 

10 ‘‘(iv) uses bags that are made of high11 density polyethylene film marked with the 

12 SPI resin identification code 2 or low-den13 sity polyethylene film marked with the SPI 

14 resin identification code 4, 

15 ‘‘(B) places at each place of business at 

16 which retail operations are conducted one or 

17 more plastic carryout bag collection bins which 

18 are visible, easily accessible to the customer, 

19 and clearly marked as being for the purpose of 

20 collecting and recycling plastic carryout bags, 

21 ‘‘(C) recycles the plastic carryout bags col22 lected pursuant to subparagraph (B), 

23 ‘‘(D) maintains for not less than 3 years 

24 records (which shall be available to the Secmstockstill on DSK4VPTVN1PROD with BILLS

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1 retary) describing the collection, transport, and 

2 recycling of plastic carryout bags collected, 

3 ‘‘(E) makes available to customers within 

4 the retail establishment reusable bags (as de5 fined in section 4056(c)(2)) which may be pur6 chased and used in lieu of using a single-use 

7 carryout bag, and 

8 ‘‘(F) meets the definition of section 

9 4056(d)(3). 

10 ‘‘(2) RECYCLING PROGRAM.—The term ‘recy11 cling program’ means a program that processes used 

12 materials or waste materials into new products to 

13 prevent waste of potentially useful materials; reduce 

14 raw materials consumption; reduce energy usage; re15 duce air, water, or other pollution; or reduce the 

16 need for disposal.’’. 

17 (c) ESTABLISHMENT OF TRUST FUND.—Subchapter 

18 A of chapter 98 of such Code (relating to trust fund code) 

19 is amended by adding at the end the following: 

20 ‘‘SEC. 9512. CARRYOUT BAG TRUST FUND. 

21 ‘‘(a) CREATION OF TRUST FUND.—There is estab22 lished in the Treasury of the United States a trust fund 

23 to be known as the ‘Carryout Bag Trust Fund’ (referred 

24 to in this section as the ‘Trust Fund’), consisting of such 

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1 amounts as may be appropriated or credited to the Trust 

2 Fund as provided in this section or section 9602(b). 

3 ‘‘(b) TRANSFERS TO TRUST FUND.—There is hereby 

4 appropriated to the Trust Fund an amount equivalent to 

5 the amounts received in the Treasury pursuant to section 

6 4056. 

7 ‘‘(c) EXPENDITURES FROM TRUST FUND.—Amounts 

8 in the Trust Fund shall be available, as provided by appro9 priation Acts, for making payments under section 6433. 

10 ‘‘(d) TRANSFER TO LAND AND WATER CONSERVA11 TION FUND.— 

12 ‘‘(1) IN GENERAL.—The Secretary shall pay 

13 from time to time from the Trust Fund into the 

14 Land and Water Conservation Fund provided for in 

15 title I of the Land and Water Conservation Fund 

16 Act of 1965 amounts (as determined by the Sec17 retary) equivalent to the aggregate of the trans18 actions on which tax is imposed under section 4056 

19 aggregate amounts determined on the basis of 

20 $0.06. 

21 ‘‘(2) SPECIAL RULE REGARDING AMOUNTS

22 TRANSFERRED.—Amounts transferred to the Land 

23 and Water Conservation Fund under paragraph (1) 

24 shall not be taken into account for purposes of de25 termining amounts to be appropriated or credited to 

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1 the fund under section 2(c) of the Land and Water 

2 Conservation Fund Act of 1965 (16 U.S.C. 460l– 

3 5(c)).’’. 

4 (d) STUDY.—Not later than December 31, 2017, the 

5 Comptroller General of the United States shall conduct 

6 a study on the effectiveness of the provisions of this Act 

7 at reducing the use of carryout bags and encouraging re8 cycling of such bags. The report shall address— 

9 (1) measures that the Comptroller General de10 termines may increase the effectiveness of such pro11 visions, including the amount of tax imposed on each 

12 carryout bag, and 

13 (2) any effects, both positive and negative, on 

14 any United States businesses. 

15 The Comptroller General shall submit a report of such 

16 study to the Committee on Ways and Means of the House 

17 of Representatives and the Committee on Finance of the 

18 Senate. 

19 (e) CLERICAL AMENDMENTS.— 

20 (1) The table of subchapters for chapter 31 of 

21 such Code is amended by inserting after the item re22 lating to subchapter C the following new item: 

‘‘Subchapter D. Carryout bags.’’. 

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1 (2) The table of sections for subchapter B of 

2 chapter 65 of such Code is amended by adding at 

3 the end the following new item: 

‘‘Sec. 6433. Qualified plastic carryout bag recycling program.’’. 

4 (3) The table of sections for subchapter A of 

5 chapter 98 of such Code is amended by adding at 

6 the end the following new item: 

‘‘Sec. 9512. Carryout bag trust fund.’’. 

7 (f) EFFECTIVE DATE.—The amendments made by 

8 this section shall take effect on July 1, 2016. 

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