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Ibach, trade groups pledge co-op fix
Story Date: 1/17/2018
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Source: POLITICO'S MORNING AGRICULTURE, 1/16/18
USDA officials are ready to work with Congress to make necessary fixes to the new tax law that has given a huge advantage to farmers who sell their goods to co-ops instead of other types of companies. A late change included in the final version of the tax bill that passed was intended to offset the loss of the Section 199A provision that applied to co-ops.
"While the goal [of the tax bill] 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," USDA Undersecretary for Marketing and Regulatory Programs Greg Ibach said in a statement. "The federal tax code should not pick winners and losers in the marketplace."
Here's the provision: Sens. John Thune, John Hoeven and other lawmakers - who are now working to tweak it as well - included an offset in the final legislation that gives farmers a deduction of up to 20 percent on total sales made to co-ops (farmers won't get the same deduction if they sell to companies not structured as cooperatives). The deduction would, in effect, offer a huge incentive for farmers to sell their products to co-ops and move away from selling to independent and private companies.
Co-ops and independent companies unite: Chuck Conner, president of National Council of Farmer Cooperatives, and Randy Gordon, president of National Grain and Feed Association, said they were working with senators to find a fix.
"The goal of these discussions is to arrive at an equitable solution that preserves the benefits that cooperatives and their farmer patrons previously enjoyed under Section 199 of the tax code, while addressing any unforeseen impacts on producers' marketing decisions," the groups said in a joint statement.
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