I
103D CONGRESS
2D SESSION
H. R. 3951
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
MARCH 3, 1994
Mr. CAMP (for himself, Mr. BREWSTER, Mr. ARCHER, Mr. GRANDY, Mr.
HOAGLAND, Mr. SUNDQUIST, Mr. PAYNE of Virginia, Mr. DOOLITTLE,
Mr. BOEHNER, Mr. QUILLEN, Mr. HANSEN, Mr. CANADY, Mr. BARLOW,
Mr. BARCIA of Michigan, Mr. BUNNING, Mr. HANCOCK, Mr. SLATTERY,
Mr. MCCRERY, Mr. THOMAS of California, Mr. HOUGHTON, Mr. ED-
WARDS of Texas, Mr. SHAW, Mr. HERGER, Mr. PETE GEREN of Texas,
Mr. LEWIS of Florida, Mr. BONILLA, Mr. LIGHTFOOT, Mr. GORDON, and
Mr. FIELDS of Texas) introduced the following bill; which was referred
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 1994’’.
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 $75,
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 $75 AMOUNT.—In the case
of any taxable year beginning in a calendar year
after 1994, the $75 amount in paragraph (1) shall
be increased by an amount equal to—
‘‘(A) $75, 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 1993’ for ‘calendar year
1992’ in subparagraph (B) thereof.’’
(b) EFFECTIVE DATES.—
(1) IN
GENERAL.—The amendment made by
subsection (a) shall apply to taxable years beginning
after December 31, 1993.
(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, 1994, 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.
Æ