Text: SCR00001 Text: SCR00003 Text: SCR00000 - SCR00099 Text: SCR Index Bills and Amendments: General Index Bill History: General Index
PAG LIN
1 1 SENATE CONCURRENT RESOLUTION NO. __
1 2 COMMITTEE ON AGRICULTURE
1 3 (SUCCESSOR TO SSB 10)
1 4 (COMPANION TO HCR 3 BY WEIGEL)
1 5 A Concurrent Resolution to request that the United
1 6 States Internal Revenue Service and the United States
1 7 Congress act to allow farmers to use deferred payment
1 8 contracts without being subject to alternative tax
1 9 liability.
1 10 WHEREAS, farmers are forced to face volatile income
1 11 swings that result from unpredictable and
1 12 uncontrollable weather and markets; and
1 13 WHEREAS, a deferred payment contract is a legal
1 14 instrument allowing farmers to sell a commodity for a
1 15 fixed price in a tax year for payment in a later tax
1 16 year; and
1 17 WHEREAS, United States tax code provisions have
1 18 allowed farmers to manage their tax burden in order to
1 19 evenly spread income over a period of years to
1 20 mitigate against the effects caused by volatile swings
1 21 of income; and
1 22 WHEREAS, under the regular income tax the income
1 23 from deferred payment contracts is allowed to be
1 24 reported in the tax year the cash is received; and
1 25 WHEREAS, the federal alternative minimum tax is a
1 26 separate tax that parallels the regular income tax and
1 27 applies to ensure that at least a minimum amount of
1 28 income tax is paid by corporate and high-income
1 29 noncorporate taxpayers who reap large tax savings by
1 30 making use of certain tax deductions and exemptions,
2 1 such as accelerated depreciation, tax credits, or
2 2 itemized deductions; and
2 3 WHEREAS, the Internal Revenue Service is asserting
2 4 that for alternative minimum tax purposes, deferred
2 5 payment commodity contracts of farmers who report
2 6 their income on a cash basis are installment sales and
2 7 the income from these contracts should be taxed in the
2 8 year of sale, not when the cash is received by the
2 9 farmer in the following tax year; and
2 10 WHEREAS, for a farmer who uses deferred payment
2 11 contracts this policy may create a substantial tax
2 12 burden in one tax year from which it is difficult or
2 13 impossible to recover in subsequent tax years; and
2 14 WHEREAS, farmers who have entered into deferred
2 15 sales contracts to lock in high prices of the recent
2 16 market may be subject to alternative tax liability
2 17 before any income is received on the sale of their
2 18 crop; and
2 19 WHEREAS, this places a potentially crippling
2 20 penalty on farmers, and especially small farmers, who
2 21 oftentimes have difficulty maintaining cash on hand;
2 22 and
2 23 WHEREAS, the position of the Internal Revenue
2 24 Service is based on a reading of the Tax Reform Act of
2 25 1986 which is contrary to the intentions of the United
2 26 States Congress and four decades of case law and
2 27 revenue rulings supporting the deferral of income
2 28 through deferred payment and deferred pricing
2 29 contracts; NOW THEREFORE,
2 30 BE IT RESOLVED BY THE SENATE, THE HOUSE OF
3 1 REPRESENTATIVES CONCURRING, That the United States
3 2 Internal Revenue Service immediately reexamine its
3 3 position regarding deferred payment contracts; and
3 4 BE IT FURTHER RESOLVED, That the United States
3 5 Congress provide a permanent solution to this problem
3 6 by enacting legislation similar to HR 4072 introduced
3 7 in 1996, in order to clarify the law and
3 8 unquestionably allow farmers to continue to use
3 9 deferred payment contracts while recognizing income
3 10 when they receive payment; and
3 11 BE IT FURTHER RESOLVED, That copies of this
3 12 Resolution be sent by the Secretary of the Senate to
3 13 the President of the United States; the Commissioner
3 14 of Internal Revenue, United States Internal Revenue
3 15 Service; the Office of Taxpayer Advocate, United
3 16 States Internal Revenue Service; the President of the
3 17 United States Senate; the Speaker of the United States
3 18 House of Representatives; and Iowa's congressional
3 19 delegation.
3 20 LSB 1546SV 77
3 21 da/sc/14
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