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Section 199A

Leaders of the Senate Finance and House Ways and Means Committees continue to work on addressing the unintended consequences of Section 199A of the Tax Cuts and Jobs Act. The NGFA notes that the two fundamental goals of these efforts remain to replicate the tax treatment accorded to cooperatives and their farmer-patrons under previous Section 199 of the tax code, and to do so in a way that restores the competitive landscape of the marketplace that existed prior to the enactment of Section 199A on Dec. 22, 2017.
Leaders of the Senate Finance and House Ways and Means Committees continue to work on addressing the unintended consequences of Section 199A of the Tax Cuts and Jobs Act.

Thank you for working to restore a competitive balance in the agricultural marketplace.The NGFA notes that the two fundamental goals of these efforts remain to replicate the tax treatment accorded to cooperatives and their farmer-patrons under previous Section 199 of the tax code, and to do so in a way that restores the competitive landscape of the marketplace that existed prior to the enactment of Section 199A on Dec. 22, 2017.

NGFA President Randy Gordon noted in a media statement that the Association is disappointed that a solution to correct Section 199A has not already been passed by Congress. However, "considerable progress has been made during the last several weeks of intensive effort toward reaching an equitable solution," Gordon said, adding that NGFA is "gratified that the many members of Congress with whom we and other stakeholders are engaged on this issue are equally committed to enacting an equitable solution as part of the next available legislative vehicle." 

During a Senate Finance Committee hearing on Feb. 14, Chairman Orrin Hatch, R-Utah, noted that the provision's current language "does not maintain the previous competitive balance between cooperatives, other agricultural businesses, and the farmers who sell their crops to them, which existed prior to enactment of the tax reform bill."

The new Section 199A - included during the waning hours of congressional consideration of the Tax Cuts and Jobs Act of 2017 - is influencing producer marketing decisions. As currently written, Section 199A language could significantly skew producers' decisions on which type of business entity with which to market their commodities. The provision unintentionally created a tax advantage for producers who sell to cooperatives instead of private and independent firms.

The Nebraska Grain and Feed Association supports the work of the Senate Finance and House Ways and Means Committee to develop a solution to this issue that does not choose winners and losers and is fair to everyone involved.

We thank Nebraska Congressman Don Bacon, Jeff Fortenberry and Adrian Smith for signing a letter penned by Young-Crawford asking Senate to solve the marketplace inequity by the Section 199A of the new tax bill.  Read the Letter

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