The National Pork Producers Council was among 29 agriculture associations and businesses that signed a letter to Congress, calling for the repeal of an Internal Revenue Service opinion that threatens the livelihoods of thousands of farm and ranch operations nationwide.
Coordinated by the Farmers for Tax Fairness, the letter states: “We are writing today to ask that you protect American farmers’ and ranchers’ ability to continue to use the cash method of accounting. The vast majority of American farm and ranch businesses use cash accounting to level out the highs and lows of commodity prices and input costs. Cash accounting assures that a farm or ranch business will not be taxed for a sale of agricultural products for which they have not been paid.”
In February 2017, IRS issued an Action on Decision letter in response to the IRS’ loss in the 5th Circuit Court of Appeals in Burnett Ranches, Ltd. v. U.S. As the letter to Congress this week explains, “the ruling places a cloud over thousands of legitimate agricultural businesses and threatens the livelihoods of American farm and ranch families. It does so by calling into question the accounting methods traditionally used by agriculture and exposing farmers and ranchers to needless litigation with the IRS.”
“What U.S. pork producers and other farmers don't need right now is more uncertainty,” says David Herring, president of NPPC and a pork producer from Lillington, N.C. “At a time when many farmers are facing export market and other headwinds, more uncertainty is exactly what we will face without access to the cash method of accounting used by so many farmers.”
Farmers for Tax Fairness formed in 2013 when Congress proposed limiting the ability of farmers to use the cash method of accounting. Farmers for Tax Fairness helped demonstrate to Congress why the cash method of accounting is critical to farm and ranch operations and ultimately Congress elected not to limit this important financial tool. Farmers for Tax Fairness is concerned that the IRS ruling on farming syndicates will impact active farm and ranch operations – many of whom may not even be aware that they are at risk.
The letter from the 29 agriculture organizations and businesses calls for the repeal of AOD 2017-17 and asks Congress to consider changing this section of the tax code to protect the ability of active farmers to use the cash method of accounting.