The National Farmers Union (NFU) has submitted comments to the Internal Revenue Service urging that a proposed rule change for the taxable value of assets be amended to consider family farmers and ranchers.
The law currently provides meaningful relief for family farmers to transfer their farm operations to the next generation through provisions that account for several variations in asset valuation. However, the U.S. Department of Treasury announced in August a regulatory proposal that would remove this provision for all taxpayers without consideration for the unique challenges that farm families face.
“As most businessmen and women consider retirement, farm operators 65 and older make up the fastest growing segment of the farming population. Succession planning is an important aspect of any farm business. It’s essential that our tax laws provide the necessary provisions to ensure farm families can pass on their operations to the next generation without being forced to sell valuable farm land,” says NFU President Roger Johnson.
NFU has long advocated for an effective estate tax with reasonable limitations, Johnson explains. The concern is that “the new proposed regulation will go as far as to deny family farmers essential discounts currently afforded through lawful provisions in the tax code.”
“A majority of a farm’s value comes from real estate, which for farmers, is not viewed as a saleable asset. We are concerned that the changes within the proposed regulation would deny essential discounts to family farms and significantly increase taxes on the transfer of family farms, threatening the ability to keep the operation intact,” he adds.
According to the Department of Treasury, the regulations will not take effect until public comments are carefully considered and then 30 days after the regulations are finalized. NFU is requesting the final regulations differentiate family farmers and ranchers from other economic categories considered under this rule.
“Treating family farmers, looking to responsibly transfer their operations, as wealthy individuals using aggressive tax strategies to artificially lower their asset value to avoid paying higher taxes is an unfair representation of family agriculture. I hope the Department of Treasury will take responsible action and consider family farmers and ranchers in their final rule,” Johnson concludes.
A full copy of Johnson’s comments can be read here.