Lawmakers are pushing for an early change to a provision in the recently passed tax law that they claim unfairly provides advantages to farmers selling to cooperatives, to the detriment of private companies.
The lawmakers argue the provision contained in the Tax Cuts and Jobs Act was inadvertently included in the conference report that reconciled the House and Senate versions of the bill.
Eighty-six representatives, all Republicans, signed a letter sent to House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell asking that this claimed tax advantage be "immediately addressed."
The issue relates to the Domestic Production Activities Deduction, Provision 199A. Broadly, the change included in the tax act increased the benefits already in place to farmers selling to cooperatives. These benefits would not accrue when selling to private entities.
Rep. Darin LaHood (R-IL) said he is working with his colleagues to try to rework the provision.
“I am aware of the provision which provides a financial advantage to co-ops over private grain elevators," LaHood told the Illinois Business Daily. "I am currently working with my colleagues and our agriculture community to correct this and provide equality to both sides. Specifically, I have sent a letter to House and Senate leadership urging Congress to continue discussing options to remedy this mistake and retroactively restore the competitive marketplace for agricultural producers. I am hopeful that Congress and all stakeholders involved will be able to find a fair solution to the issue.”
In their letter, the lawmakers wrote that they have heard from many agricultural constituents complaining of the "unintentional inequity" contained in the tax act, which was passed in December.
"While not intended, this Senate-sponsored provision has resulted in a dramatic competitive imbalance impacting numerous agricultural value chain stake holders including grain handlers, feed mills, seed companies, ag retailers, biofuel producers, banks, livestock marketers, and dairy producers," the representatives wrote.
Sen. Chuck Grassley (R-Iowa) is leading the charge to introduce the amendment in the Senate. He has stated there is agreement on changing the code back to what was in place and that it may be included in an appropriations bill to be due to be discussed this month.
But there remains an issue over whether the advantage enjoyed since the start of the year will be retroactively reversed.
“I think it’s reached the point where, if there isn’t a complete agreement, there’s enough agreement within the Congress that if we can do what we originally intended to do — maintaining the status quo for co-ops — we’re going to go ahead and do it, even if the co-ops aren’t completely satisfied with what we’re doing,” Grassley told Farm Week magazine.