In this file:
· Bloomberg: Congress May Fix Tax Tweak That Gives Farm Co-Ops an Edge
· USDA: Statement of Under Secretary Greg Ibach on Section 199A Tax Code Fix
Congress May Fix Tax Tweak That Gives Farm Co-Ops an Edge
Crop sales to co-ops incentivized by provision in tax bill
Lawmakers looking for remedies, say impact was unintentional
By Mario Parker and Sahil Kapur, Bloomberg
January 11, 2018
A provision in last month’s U.S. tax overhaul that gives farmers the opportunity to significantly minimize their taxable income is drawing fire from some companies who could lose out as a result, while two Senators behind the change pledged to fix the problem.
The measure in question gives farmers a bigger deduction if they sell crops to agricultural co-operatives. That appears to be a win for farmer-owned agribusinesses such as CHS Inc. at the expense of other major crop buyers like Archer Daniels Midland Co., Bunge Ltd. and Cargill Inc.
The two Republican senators who worked to craft that part of the bill, Senator John Hoeven of North Dakota and John Thune of South Dakota, say they were trying to preserve a provision from the outgoing tax code, and that the outcome for co-ops was unintentional. They’re now working with other lawmakers and the agriculture industry to find a "reasonable solution,” Ryan Wrasse, a spokesman for Thune, said in an emailed statement Wednesday.
“Senator Thune believes that producers should make decisions about where and how to sell their products without the tax code unfairly tipping the scales in favor of marketing to one type of business entity or another," Wrasse said.
"Right now in terms of the technical fixes, this is the one that probably needs to get fixed the most," Thune told reporters in Washington on Thursday, referring to the tax bill.
Potential Solutions …
Statement of Under Secretary Greg Ibach on Section 199A Tax Code Fix
Source: USDA Office of Communications
Jan 12, 2018
(Washington, D.C., January 12, 2018) – The U.S. Department of Agriculture’s (USDA) Under Secretary for Marketing and Regulatory Programs Greg Ibach today issued the following statement regarding efforts to address concerns with recent changes to Section 199A of the federal tax code. Some agriculture stakeholders have raised questions about potential market effects on cooperatives and independent grain-related businesses.
Ibach’s statement is as follows:
“The aim of the Tax Cuts and Jobs Act was to spur economic growth across the entire American economy, including in the agricultural sector. While the goal was to preserve benefits in Section 199A for cooperatives and their patrons, the unintended consequences of the current language disadvantage the independent operators in the same industry. The federal tax code should not pick winners and losers in the marketplace. We applaud Congress for acknowledging and moving to correct the disparity, and our expectation is that a solution is forthcoming. USDA stands ready to assist in any way necessary.”
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