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Statement of America’s Blood Centers
Introduction
Chairman Rangel and distinguished Members of the
Committee, America’s Blood Centers (ABC) thanks you for this opportunity to
comment on the need for technical corrections to the “Pension Protection Act of
2006.” ABC is North America’s largest network of community blood centers. Our
community based blood centers serve more than 180 million people in over 600
collection sites and provide life saving blood products and services to more
than 4,200 hospitals and healthcare facilities.
ABC fully appreciates the importance of
adjusting the “Pension Protection Act of 2006” to ensure that the legislation
effectively implements Congress’s intent. ABC strongly supports this
Committee’s efforts to ensure that the language in this legislation is a true
and accurate representation of Congress’s objectives. A technical correction
is needed to properly implement the excise tax exemption provided in the
Pension Protection Act for fuel used in the transportation of blood products to
and from hospitals, clinics, and collection sites.
Explanation of the Need for a Technical Correction
Section 1207 of the Pension Protection
Act of 2006 exempted qualified blood collector organizations from certain
excise taxes, including the excise tax on fuel and tires purchased for vehicles
primarily used in the collection, storage or transportation of blood. The
exemption from the fuel tax, which is included in section 6416(b)(2)(E) of the
Internal Revenue Code, was intended to provide qualified blood collector
organizations with an exemption comparable to that afforded to the American
National Red Cross. The exemption was structured to parallel the exemptions for
State and local governments (section 6416(b)(2)(C)) and nonprofit educational
organizations (section 6416(b)(2)(D)). The exemption for State and local
governments and nonprofit educational organizations can be effected in several
different ways, including through use of credit cards. However, while the
amendments made by the Act included cross references to qualified blood
collector organizations in most places in which there were cross references to
State and local governments and nonprofit educational organizations, the
amendments inadvertently missed cross references in the three places in the
Code where state and local governments and nonprofit educational organizations
are referenced for purposes of effecting the exemption through the credit card
provisions: section 6416(a)(4)(A), section 6416(a)(4)(C), and section 4101(a)(4).
This technical error occurred
because the three references were difficult to find through an electronic
search of the Code. Searches of the Code for “nonprofit educational
organization,” “State or local,” “section 6416(b)(2)(C)” or “section
6416(b)(2)(D)” would not have revealed the references.
Proposed Technical Correction
In each of section 6416(a)(4)(A),
6416(a)(4)(C) and section 4104(a)(4), strike “(C) or (D)” and insert “(C),(D),
or (E)”.
Correction Does Not Expand Exemptions
The proposed technical correction
does not expand the core exemption from excise taxes under chapter 32 and
section 4041(a) and (d) contained in section 6416(b)(2). Instead, it would
clarify that the qualified blood collector organizations can effect the
exemption through use of credit cards, rather than solely through refunds and
credits.
Correction Consistent with Legislative Intent
Congress intended to treat qualified
blood collector organizations like the American National Red Cross for the
purposes of certain excise tax exemptions. To achieve this equalization, section
1207 of the Pension Protection Act added qualified blood collector
organizations to lists of exempt entities that included State or local
governments and nonprofit educational organizations in sections 4221, 4253 and
6416(b), as well as in various cross references to those sections.
In the Joint Committee on
Taxation’s technical explanation of the Pension Protection Act (JCX-38-06,
August 3, 2006), the description of present law for the excise tax exemption
for qualified blood collector organizations (beginning on page 277) focuses on
exemptions provided to the American National Red Cross. One can infer from
this discussion that Congress intended to provide the same excise tax benefits
to qualified blood collector organizations with respect to vehicles used for
blood collection as the Secretary of the Treasury had provided by
administrative action to the American National Red Cross. As noted in the
Joint Committee explanation (page 278), on April 18, 1979, the Secretary used
statutory authority to grant the Red Cross an exemption from taxes under
chapter 32. The explanation notes, “Credit and refund of tax is subject to the
requirements set forth in section 6416 relating to the exemption for taxable
articles sold for exclusive use of State and local governments.” This is
almost a direct quote from the 1979 notice (44 Fed. Reg. 23407, 1979-1 C.B.
478), which granted the exemption. As a result of the 1979 notice, the Red
Cross is treated as a “State or local government” for purposes of section
6416. See also, IRS Publication 510, pages 4 and 19, in which the definition
of “State” includes the Red Cross. Therefore, treating qualified blood
collector organizations (with respect to vehicles primarily used in the
collection, storage, or transportation of blood) in a manner consistent with
States and local governments under section 6416 is consistent with legislative
intent.
Conclusion
America’s Blood Centers is committed to
continuing to provide top quality blood services and life saving blood supplies
to communities throughout the United States. Through a fuel tax exemption, among
other excise tax exemptions, Congress sought to ensure that qualified community
based blood centers could operate with the same exemption status as the American
National Red Cross. While this was the intent of the legislation, minor technical
errors in the legislation, if not corrected, may force qualified community
based blood centers to have to use complicated refund and credit provisions to
benefit from the exemption, rather than the simpler credit card approach used
by the American National Red Cross and other beneficiaries of the same tax
exemption. By correcting the technical errors, Congress will ensure that the
excise tax exemptions for qualified blood centers will operate as intended.
In closing, ABC would like to thank Chairman
Rangel, Representatives McCrery, English, and other Members of this Committee
for their continued leadership and support. ABC is grateful for the Committee’s
strong bi-partisan support which led to passage of the original excise tax
exemptions. We are committed to working with Congress to ensure that the
“Pension Protection Act of 2006” truly effectuates the important objectives for
which it was enacted and we appreciate the opportunity to comment on this
legislative effort. We would be pleased to provide any additional information
and are eager to work with the Committee regarding this technical problem which
has complicated implementation of Congressional intent. Thank you for your
consideration.
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