ASA joins Agriculture Industry in Joint Letter to Senate Finance on Tax Reform

Jan 23, 2014

ASA recently joined several other agricultural organizations in a letter to the State Finance Committee with suggestions regarding tax reform.

Addressed to Chairman Max Baucus and Ranking Member Orrin Hatch, the letter commends the State Finance Committee for thoughtfully tackling tax reform, and states that it is not the group’s intent to represent a comprehensive statement on the issue, instead offering “common sense” suggestions “and guidance on agricultural issues.

“While we generally support the concept of creating a simplified pro-growth tax code, it is our goal to provide you with guidance as to how your proposed changes will impact the agriculture industry,” the groups said in the letter.

The letter addressed two items contained in the Chairman’s Discussion Draft of particular interest to farmers and ranchers:

Cash Accounting vs. Accrual Accounting - The letter states that “the discussion draft proposes a fundamental change to a common practice in most agricultural businesses. According to the discussion draft, agricultural businesses with more than $10 million in gross receipts will be required to shift from the cash accounting method to the accrual method of accounting. Due to uncertain and fluctuating income that results from variable cropping practices, weather conditions, and markets, farmers and ranchers need a tax code that allows them to manage the risks associated with agriculture while complying with tax liabilities under the law.”

Section 179 Expensing - The groups also wrote that “the small business expensing provides agricultural producers with a way to maximize business purchases in years when they have positive cash flow” and commended the inclusion of the Section 179 provisions in the cost recovery discussion draft and support maintenance of a $1 million Section 179 small business expensing limitation and $2 million acquisition limit.

“As organizations representing small businesses, we are encouraged that Senate Finance Committee members are working to develop a comprehensive tax plan that addresses the needs of a twenty-first century economy and we look forward to working with you to provide insight and direction,” the groups said.

To read the entire letter, click here.