The following information is presented for general information only. Consult with your Attorney or Tax Consultant to determine its application to your specific organization and situation.

Tax Legislation update — 2023

The Food Donation Improvement Act of 2021 was signed into law in 2023. The bill enhances coverage of the Bill Emerson Good Samaritan Food Donation Act (Emerson Act) of 1996, which promotes food donation by providing civil and criminal liability protection to food donors and food recovery organizations. Despite the protection under the Emerson Act, many retailers and foodservice outlets feared liability as a result of food donations.

The FDIA extends liability protections for qualified direct food donations. Examples of this could be a school cafeteria or local restaurants donating excess food directly to food-insecure individuals. The new bill also covers food donations to outlets selling food at a greatly reduced price, such as “pay what you can afford” restaurants.

The FDIA also makes the U.S. Department of Agriculture responsible for regulating the donations, which lends credibility to food donations and in the future will provide clarity on food expiration/sell by dates on food package labeling.

The Good Samaritan Hunger Relief Tax Incentive Extension Act of 2009 (S. 1313) was introduced on June 22, 2009 by Senator Lugar (R-IN) and Blanche Lincoln (D-AR). Senators Patrick Leahy (D-VT), Dick Durbin (D-IL), Bernie Sanders (I-VT), Pat Roberts (R-KS) and Debbie Stabenow (D-MI) are co-sponsors of this legislation. This legislation amends the Internal Revenue Code of 1986 to permanently extend the charitable deduction for contributions of food inventory.

An Extension and Expansion of Charitable Deduction of Contributions of Food Inventory was announced by Representative Sander Levin (D-MI) on July 15, 2009 (Press Release). Representative Geoff Davis (R-KY) co-sponsored this legislation. The legislation (H.R. 3227) permanently extends the current tax deduction so that all business taxpayers are eligible and provides a two year increase in the amount of the deduction to address the increased need during the recession and economic recovery.

Tax Law

The Harvard Food Law and Policy Clinic has published a legal guide for food donations, “Tax Deduction for Food Donation” that can be downloaded here.

U.S. Congress enacted Section 170 of the Internal Revenue Code in 1976 to encourage donations by allowing C corporations to earn an enhanced tax deduction for donating selected surplus property, including food.

The Code provides that wholesome food that is properly saved, donated to an approved agency and properly receipted is eligible for an enhanced tax deduction. This enhanced deduction is equal to ½ of the donated food’s appreciated value, with the limitation that the total deduction cannot exceed twice the donated food’s basis cost. This incremental tax deduction is calculated from the donated food’s fair market value and basis food and labor cost. The IRS may challenge the value of donated food.

Historical Legislation

The Pension Protection Act of 2006 (PPA) (H.R. 4) signed by President Bush on August 17, 2006 extended the provisions of KETRA through December 31, 2007.

The Emergency Economic Stabilization Act of 2008 (H.R. 1424) signed by President Bush on October 3, 2008 extended the provisions of KETRA through December 31, 2009.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (H.R.4853, Public Law 111-312) signed on December 17, 2010 extended the enhanced charitable deduction for contributions of food inventory provisions of KETRA. This provision provides a two-year extension for non-C corps, retro-active to January 1, 2010, extended to December 31, 2011.

See an explanation of how this enhanced tax deduction applies to donation of wholesome food.

Fair market value (FMV) continues to be evaluated by the IRS on a company by company basis. Congress’ intention to encourage this type of donation would be enhanced by codifying an important Tax Court ruling regarding FMV determinations.

You can make a difference

SeaShare needs your support to continue to build and expand our unique hunger-relief programs. Here are the kinds of support SeaShare needs to succeed: donate seafood, donate services and supplies, or provide financial support.