Section 199A Fix Is Coming

Dan Economy, Industry News Release

A DTN report says Congress may be close to replacing the Section 199A language in the new tax law that curbs the advantages of farmers who sell their products to cooperatives rather than private companies.

sectionIowa Senator Chuck Grassley says a possible fix would give farmer cooperatives the same tax benefits they had under the old Section 199A, known as the Domestic Production Activities Deduction. That tax break amounted to about nine percent of a cooperative’s income and up to half the amount of wages paid to cooperative workers. Cooperatives then passed on the benefits of the deduction to their farmer-members.

Grassley says, “I think there is enough agreement in Congress to do what we originally intended to do, which is maintaining the status-quo for co-ops. With enough agreement, we’re going to go ahead and get it done, even if co-ops aren’t completely satisfied with what we’re doing.”

The fix coming out of Congress will essentially reinstate the law that was in effect prior to the 2017 tax bill and reestablish the Domestic Activities Deduction to the way it was over the last dozen years. Grassley says the Section 199A change will likely be included in the omnibus spending appropriations bill that has a March 23 deadline. Now that lawmakers and President Trump have agreed on a budget, Grassley feels the appropriations bill won’t be as big of a political battle to get passed.

From the National Association of Farm Broadcasting News Service.