Overview
Title
To amend the Internal Revenue Code of 1986 to provide tax incentives for the establishment of grocery stores in certain underserved areas.
ELI5 AI
H.R. 9914, the "Fresh Food Act," is a plan to help more grocery stores open in places that don't have many, by giving money back to the owners through special tax breaks if they sell fresh fruits, vegetables, meat, and milk. This means people in those areas can get healthier food more easily, and it can also create new jobs.
Summary AI
H.R. 9914, known as the “Fresh Food Act,” seeks to amend the Internal Revenue Code of 1986 to provide tax incentives for opening grocery stores in underserved areas. The bill introduces tax credits for businesses that employ individuals and sell fresh produce, meat, and dairy in these areas. It offers increased work opportunity tax credits and specific incentives for grocery stores that source fresh goods locally. The legislation aims to improve access to fresh food and provide economic benefits to underserved communities between 2024 and 2031.
Published
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AnalysisAI
Summary of the Bill
H.R. 9914, known as the "Fresh Food Act," was introduced to amend the Internal Revenue Code of 1986. The primary goal of the bill is to encourage the establishment of grocery stores in underserved areas through tax incentives. These incentives include increased work opportunity tax credits and credits for stores selling fresh produce, such as fruits, vegetables, meat, and dairy, particularly if these goods are locally sourced. The initiative is a time-limited measure, aiming to boost grocery store businesses in designated areas from 2025 to 2030.
Significant Issues
One of the notable issues within the bill is its potential to favor new grocery store chains rather than supporting existing small businesses in underserved areas. The bill's definitions and criteria might also be too restrictive or complex, making it challenging for some stakeholders to qualify for benefits. For instance, the exclusion of canned and frozen foods from eligible items could disadvantage regions where fresh produce availability is limited due to supply chain or geographic challenges. Additionally, the complex procedure for determining what qualifies as an "underserved area" might introduce issues of subjectivity and lack of transparency. This complexity could create barriers to understanding and applying for these incentives.
Impact on the Public
Broadly, the bill aims to alleviate food deserts by incentivizing new grocery stores to set up shop in underserved areas, which could improve access to fresh food for local populations. For the general public, this means potentially better availability of fresh produce, which could contribute to healthier lifestyles and improved public health outcomes in these areas. However, the temporary nature of the incentives might not provide a long-term solution for sustainable business growth in these regions.
Impact on Specific Stakeholders
For new grocery store businesses, especially larger or chain operations, the bill presents a lucrative opportunity to benefit from tax credits and potentially capture market share in underserved areas. Conversely, existing small grocery businesses may find the bill's criteria and definitions limiting, as they might not have the resources to navigate these complexities or meet the specific requirements such as store size and sales proportions of fresh goods.
Local farmers and producers might see a boost in business through the incentives for sourcing goods locally, which could strengthen local economies and supply chains. However, if the criteria for local sourcing are not clearly enforced or verified, there may be inconsistencies in how effectively this potential benefit is realized.
In conclusion, while the "Fresh Food Act" has the potential to positively impact access to fresh groceries in underserved areas, its execution may inadvertently favor larger newcomers or those with existing resources, potentially side-lining smaller, already established businesses. The bill's complexity and temporary nature suggest that while it could initiate change, long-term strategies and more inclusive criteria may be necessary to sustain and support underserved communities over time.
Financial Assessment
The bill H.R. 9914, known as the “Fresh Food Act,” primarily focuses on providing tax incentives rather than direct spending or appropriations to encourage the establishment of grocery stores in underserved areas. This approach aims to utilize financial incentives to attract businesses to areas lacking access to fresh foods, thereby improving community health and economic conditions.
Tax Credits for Employment
One significant financial aspect of the bill is the introduction of an increased work opportunity tax credit. This incentive allows businesses in underserved areas to claim an additional $1,000 for each individual employed in the operation of a new grocery store. The intention here is to encourage job creation, which can boost the local economy. However, there is a concern that this tax benefit might favor new grocery store chains entering these areas, potentially overshadowing existing small businesses that are already struggling. This could inadvertently skew support towards larger entities rather than bolstering the foundations of community businesses.
Incentives for Selling Fresh Produce
Additionally, the bill includes a credit for sales of fresh fruits, vegetables, meat, and dairy. Businesses can receive a varying percentage of tax relief based on their sales of these fresh items, starting at 30% for the first two years and decreasing to 28% and then 26% in subsequent years. The bill also provides an additional 5% bonus if the produce is locally sourced. This aims to promote local agriculture and support local economies. However, by excluding canned or frozen foods from these definitions, the bill might disadvantage areas where logistics make fresh produce less accessible.
Duration and Definitions
The incentives are set to be available only until January 1, 2031, which may limit long-term planning for businesses considering entering these markets. A finite period for these tax benefits could deter some potential investors who seek long-term stability and predictability in their financial planning.
Furthermore, the bill uses specific criteria to define a "grocery store," including square footage and sales percentages, which could exclude smaller stores that contribute significantly to their communities. This could lead to a narrow interpretation that potentially leaves out stores that do not meet these exact definitions but are nonetheless valuable to the area they serve.
Complex Criteria
The bill's financial benefits are layered with complex technical terms and cross-references to existing legal codes. These complexities might pose challenges to small business owners or individuals without legal or financial expertise, making it difficult to understand or fully leverage the available incentives.
In summary, the financial structure of the Fresh Food Act seeks to incentivize the establishment and operation of grocery stores in underserved areas through tax credits. These measures aim to stimulate economic activity and improve access to fresh foods, though they might also introduce challenges in terms of eligibility criteria and the potential for favoring larger, new market entrants over existing small businesses.
Issues
The bill provides tax incentives for grocery stores specifically in underserved areas, which could potentially favor new grocery store chains entering these areas rather than supporting existing small businesses that may already be struggling (Section 2).
The definition of 'fresh fruits, vegetables, meat, and dairy' excludes canned or frozen foods, which could disadvantage areas where fresh produce is less accessible due to logistical constraints (Sections 2, 1400A, 1400B).
The process for determining what constitutes an 'underserved area' involves complex criteria and could make it challenging for stakeholders to understand eligibility, introducing subjectivity or lack of transparency (Section 1400B).
The certification requirement by a 'designated local agency' or through 'alternative certification' methods introduces potential complications and inconsistencies in how businesses or individuals are certified, possibly leading to a lack of uniformity or favoritism (Sections 1400, 1400B).
The finite period for incentives and credits, ending on January 1, 2031, limits the long-term effectiveness of encouraging sustainable business practices in underserved areas, potentially disincentivizing planning for new grocery stores (Sections 2, 1400, 1400A).
The language describing tax benefits and definitions of new grocery stores involves complex technical terms and references to other legal codes, which might be difficult to interpret for small business owners or taxpayers without expert assistance (Sections 2, 1400, 1400A, 1400B).
The criteria defining a 'grocery store' include specific square footage and sales percentages, which may exclude stores that support community needs but do not strictly meet these requirements (Section 1400B).
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
In Section 1, the text states that this law can be called the "Fresh Food Act."
2. Tax incentives for establishment of grocery stores in certain underserved areas Read Opens in new tab
Summary AI
This section of the bill introduces tax incentives to encourage the establishment of grocery stores in underserved areas. It provides tax credits for businesses employing people in new grocery stores in such areas, applies to specific grocery items, offers additional credits for locally sourced goods, and includes detailed definitions of terms such as "fresh produce," "grocery store," and "underserved area."
Money References
- “(a) In general.—In the case of an individual employed in the trade or business of operating a new underserved area grocery store (as certified by the designated local agency (as defined in section 51(d)(12)), the limitation otherwise in effect under section 51(b)(3) with respect to such individual shall be increased by $1,000.
1400. Increased work opportunity tax credit Read Opens in new tab
Summary AI
The section outlines an increase in the work opportunity tax credit by $1,000 for individuals employed at new underserved area grocery stores, as certified by a local agency. It also allows for alternative certification methods and specifies that this benefit applies to wages paid between January 1, 2025, and December 31, 2030.
Money References
- (a) In general.—In the case of an individual employed in the trade or business of operating a new underserved area grocery store (as certified by the designated local agency (as defined in section 51(d)(12)), the limitation otherwise in effect under section 51(b)(3) with respect to such individual shall be increased by $1,000.
1400A. Credit for sales of fresh fruits, vegetables, meat, and dairy Read Opens in new tab
Summary AI
The section outlines a tax credit for grocery stores selling fresh fruits, vegetables, meat, and dairy in underserved areas. The credit is based on a percentage of the cost of these goods sold, varies over a series of years, and offers a bonus for locally sourced products, applying to tax years from after December 31, 2024, to before January 1, 2031.
1400B. Definitions Read Opens in new tab
Summary AI
For this section of the bill, "fresh fruits, vegetables, meat, and dairy" are defined as agricultural products suitable for human consumption but not canned or frozen. It also explains what qualifies as a "grocery store," which includes specific size and sales requirements, and introduces the concept of a "new underserved area grocery store" located in areas lacking grocery access, while outlining criteria for what constitutes an "underserved area."