The farmer cooperatives want the Trump administration to withdraw proposed tax rules that they say would raise taxes on farmers and ranchers nationwide. On Thursday, the Executive Council of the National Council of Farmer Cooperatives asked the Treasury Department and the Office of Management and Budget to withdraw a proposal that would implement Section 199A(g) of the tax code. The proposal doesn’t allow farmer cooperatives to deduct business with non-members of the cooperative.
NCFC President and CEO Chuck Conner said an agreement between Congress and private grain companies was reached in 2018 to keep the deduction for farmer cooperatives during negotiations on tax code changes.
“And so, we thought we had overcome all of this. But, then when the Department of Treasury chose to issue the regulation to implement this deduction, they took a very big chunk of it away by not allowing co-ops to include any business from non-members that the do within their co-ops. Taking out this deduction takes away a big deduction to farmers and in many cases is going to result in farmers paying higher taxes.”
The farmer cooperatives earn the deduction and pass it on to farmers. NCFC believes the proposal violates the intent of Congress, and in a recent House hearing, Treasury Secretary Steve Mnuchin stated he would work with Congress on the issue before finalizing the proposal.
“He very strong committed on the record that he was aware of the issue, aware that there was an inequity here in the proposed regulations and he would work with members of Congress before they went final with those regulations, and that did not happen. And, obviously the COVID-19 thing occurred. We sort of put a lot of this work on the shelf because we just didn’t feel like it was appropriate to be hounding the Secretary of Treasury at a time when he was trying to work to preserve the health and well-being of all Americans. And then, low and behold, we were surprised and certainly all the members of Congress were surprised when this regulation suddenly moved forward without any prior notice. So, a very strong violation here of what he had promised during a House Ways and Means Committee hearing.”
Conner said that in general, NCFC believes non-member business accounts for roughly 155 of all business for farmer cooperatives. He said the proposal contradicts the needs of farmers right now.
“At this particular time, when no one would argue that farmers are probably facing the roughest patch that they’ve had in well over 30 years, to be sort of throwing this in the mix at the same time that we’ve put together generous programs to try and help them, that’s sort of sliding money in one pocket and taking it out the other. And I just find no one who believes that’s a good idea or believes that was anybody’s intent. But yet, that’s the consequence of taking away a good portion of this deduction.”
Conner urges the Trump administration to follow through on the agreement.
“The Secretary of Treasury has a lot of very tough decision on his plate and a lot of decisions that I am thankful that I don’t have to make, but this is not one of them. This is an agreement that was negotiated between all competing interests, passed Congress by virtually unanimous consent, both bodies. To do that meant that we really had to take care of all the loose ends, and there’s no reason for the Department of Treasury to try and mess around with those loose ends. We’ve got something that everyone supports. Stay with it and all will be fine. And this does not need to be a tough decision.”
Visit the National Council of Farmer Cooperatives Website to learn more.
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