The change included in the tax act increased the benefits already in place to farmers selling to co-operatives. File photo
The so-called "grain glitch" in the federal tax reform bill passed in December has been fixed, much to the relief of independent businesses.
Grain operators and other stakeholders had warned that if action were not taken, "countless businesses" would have been forced into costly restructuring. The issue relates to the Domestic Production Activities Deduction, Section 199A. Broadly, the change included in the tax act increased the benefits already in place to farmers selling to co-operatives. These benefits would not accrue when selling to private entities.
Operators and members of Congress believe the provision was a "glitch" that made its way into the tax act inadvertently. Changes that essentially revert back to what was in place previously were included in last week's omnibus spending bill. The changes are retroactive to Jan. 1.
"The fix that was signed into law last week supports all farmers, whether they choose to sell their crops to a co-op or to an independent grain company," Jackie Anderson, head of media relations at Archers Daniels Midland, told Illinois Business Daily. "We appreciate the hard work of the many representatives who came together to negotiate a constructive solution to address this important issue. It’s a win-win for America’s agriculture economy, and we are pleased that it was enacted into law."
Businesses operating across the industry signed a letter to Washington urging for the change to be included in the spending bill. Eighty-six lawmakers signed on to a separate letter sent to Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan.
In a statement published on grainnet.com, the National Grain and Food Association President Randy Gordon commended a team of tax experts from NGFA-member companies, half from cooperatives and half from private/independent organized businesses.
They provided, Gordon said, "sound, factual advice and analysis in a totally professional and above-board process throughout the two-plus months that it took to develop and analyze the real-world impacts of an equitable concept to correct Section 199A."
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