Will Section 199A Be Fixed This Week?

Farmers and agribusinesses are patiently waiting to see how Congress will modify the controversial Section 199A. ( Farm Journal )

Farmers and agribusinesses are patiently waiting to see how Congress will modify the controversial Section 199A. That change could be seen as early as this week.

The latest continuing resolution, which would fund the government through March 23, doesn’t include a section 199A revision, but staffers are working on the language to get it included, says Jim Wiesemeyer ProFarmer’s Washington policy analyst.

“It’s really important that co-ops and the private sector stay at the table to work out the issue sooner rather than later. Clearly the language in the final conference has a serious flaw, so it needs to be corrected soon,” says House Ways and Means chairman Kevin Brady (R-Texas). ”I think the House version was the right approach, but we are trying to find a solution.”

According to Wiesemeyer, the House version of the tax bill eliminated the Section 199 deduction for U.S. manufacturers, including agricultural co-ops, which often passed those benefits on to their farmer members. To preserve those tax benefits, Republican senators —John Thune of South Dakota and John Hoeven of North Dakota — worked out a new deduction for co-ops and secured it during conference of the House and Senate legislation. But their language allowed farmers to deduct 20% of their gross sales to co-ops, but only 20% of their net income if they sell to other companies.

The matter will eventually be rectified, Wiesemeyer says, lawmakers want to make sure that whatever corrections are made do not lead to more problems and new glitches ahead.

Whether any changes would be made retroactive to Jan. 1 is still unclear.

 

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