I
104TH CONGRESS
1ST SESSION
H. R. 783
To amend the Internal Revenue Code of 1986 to prevent the reclassification
of certain dues paid to tax-exempt agricultural or horticultural organizations.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 1, 1995
Mr. CAMP (for himself, Mr. PAYNE of Virginia, Mr. THOMAS, Mr. BUNNING
of Kentucky, Mr. HOUGHTON, Mr. HERGER, Mr. MCCRERY, Mr. HAN-
COCK, Mr. ENGLISH of Pennsylvania, Mr. BREWSTER, Mr. BLILEY, Mr.
KNOLLENBERG, Mrs. MEYERS of Kansas, Mr. DOOLEY, Mr. BARCIA, Mr.
CONYERS, Mr. GORDON, Mr. DICKEY, Mr. WILSON, Mr. BAESLER, Mr.
HUTCHINSON, Mr. BARRETT of Nebraska, Mr. CANADY of Florida, Mr.
HANSON, Mr. EHLERS, Mr. PARKER, Ms. DANNER, Mr. COMBEST, Mr.
MINGE, Mr. KLUG, Mr. CHRYSLER, Mr. SISISKY, Mr. EDWARDS, Mr.
HAMILTON, and Mr. WOLF) introduced the following bill; which was re-
ferred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to prevent
the reclassification of certain dues paid to tax-exempt
agricultural or horticultural organizations.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Tax Fairness for Agri-
culture Act of 1995’’.
SEC. 2. TREATMENT OF DUES PAID TO AGRICULTURAL OR
HORTICULTURAL ORGANIZATIONS.
(a) GENERAL RULE.—Section 512 of the Internal
Revenue Code of 1986 (defining unrelated business tax-
able income) is amended by adding at the end thereof the
following new subsection:
‘‘(d) TREATMENT OF DUES OF AGRICULTURAL OR
HORTICULTURAL ORGANIZATIONS.—
‘‘(1) IN GENERAL.—If—
‘‘(A) an agricultural or horticultural orga-
nization described in section 501(c)(5) requires
annual dues to be paid in order to be a member
of such organization, and
‘‘(B) the amount of such required annual
dues does not exceed $100,
in no event shall any portion of such dues be treated
as derived by such organization from an unrelated
trade or business by reason of any benefits or privi-
leges to which members of such organization are en-
titled.
‘‘(2) INDEXATION
OF
$100
AMOUNT.—In the
case of any taxable year beginning in a calendar
year after 1995, the $100 amount in paragraph (1)
shall be increased by an amount equal to—
‘‘(A) $100, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar
year in which the taxable year begins, by sub-
stituting ‘calendar year 1994’ for ‘calendar year
1992’ in subparagraph (B) thereof.
‘‘(3) DUES.—For purposes of this subsection,
the term ‘dues’ includes any payment required to be
made in order to be recognized by the organization
as a member of the organization.’’
(b) EFFECTIVE DATES.—
(1) IN
GENERAL.—The amendment made by
subsection (a) shall apply to taxable years beginning
after December 31, 1994.
(2) TRANSITIONAL RULE.—If—
(A) for purposes of applying part III of
subchapter F of chapter 1 of the Internal Reve-
nue Code of 1986 to any taxable year beginning
before January 1, 1995, an agricultural or hor-
ticultural organization did not treat any portion
of membership dues received by it as income de-
rived in an unrelated trade or business, and
(B) such organization had a reasonable
basis for not treating such dues as income de-
rived in an unrelated trade or business,
then, for purposes of applying such part III to any
such taxable year, in no event shall any portion of
such dues be treated as derived in an unrelated
trade or business.
(3) REASONABLE
BASIS.—For purposes of
paragraph (2), an organization shall be treated as
having a reasonable basis for not treating member-
ship dues as income derived in an unrelated trade or
business if the taxpayer’s treatment of such dues
was in reasonable reliance on any of the following:
(A) Judicial precedent, published rulings,
technical advice with respect to the organiza-
tion, or a letter ruling to the organization.
(B) A past Internal Revenue Service audit
of the organization in which there was no as-
sessment attributable to the reclassification of
membership dues for purposes of the tax on un-
related business income.
(C) Long-standing recognized practice of
agricultural or horticultural organizations.
(4) DUES.—For purposes of this subsection,
the term ‘‘dues’’ includes any payment required to
be made in order to be recognized by the organiza-
tion as a member of the organization.
Æ