Senators Propose Eliminating Tax Liability for IRA Assistance for Distressed Farmers

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    Legislation that would remove the tax liability for distressed farmers and ranchers who received assistance provided in the Inflation Reduction Act (IRA) has been introduced by four members of the Senate Agriculture Committee. Currently, farm loan borrowers who are already at financial risk are facing tax liability on the IRA assistance.

    Senators Cory Booker (D-N.J.), Debbie Stabenow (D-MI), Raphael Warnock (D-GA), and Tina Smith (D-MN), all members of the Senate Committee on Agriculture, Nutrition, said in a release that distressed borrowers with qualifying USDA farm loans have already received nearly $800 million in assistance as part of the $3.1 billion for distressed farm loan borrowers provided through Section 22006 of the IRA. Those farmers are now facing the “imminent threat of hundreds of millions of dollars of IRS tax liability if Congress does not act.” The Family Farmer and Rancher Tax Fairness Act exempts these payments from federal income taxes.

    The Inflation Reduction Act of 2022 was passed in August and signed by President Biden totaling roughly $770 billion. The IRA includes nearly $40 billion for agriculture, forestry and rural development. That includes nearly $20 billion in funding for the Agricultural Conservation Easement Program (ACEP), Conservation Stewardship Program (CSP), Environmental Quality Incentives Program (EQIP) and Regional Conservation Partnership Program (RCPP), plus technical assistance. In addition, it includes $14 billion for rural development to support the development of renewable energy and spending on biofuels infrastructure. The bill also provides $4 billion to mitigate the impacts of drought in the Western Reclamation states, with priority given to the Colorado River Basin and other basins experiencing comparable levels of long-term drought.

    “The critical financial assistance we fought to include in the Inflation Reduction Act is a lifeline for distressed farmers around the country,” said Senator Booker. “But now those same farmers are facing a burdensome tax liability. Congress needs to quickly cut these taxes to ensure that farmers who received assistance stay on the path back to financial stability.”

    The legislation is supported by the following groups: National Farmers Union, Farm Action Fund, Farm Aid, Federation of Southern Cooperatives, Intertribal Agriculture Council, National Family Farm Coalition, Pennsylvania Farmers Union, Rural Advancement Foundation International-USA, Rural Coalition, USDA Coalition of Minority Employees, Justice for Black Farmers Group, Black Belt Justice Center, Black Farmers of Chilton County, Black Farmers and Agriculturalists Association, Mississippi Minority Farmers Alliance, Reed-Wright Black Farmers Coalition, African American Agriculturalist Association, Brown Family Farm, Sustaining Environments Through Education and Economic Development, Inc. (SEED),  Independent Black Farmers, African American Agriculture Association, Black Men in America, Cowtown Foundation, No Fear Coalition, Acorn8 and Coalition for Change, Inc.

    The full text of the Family Farmer and Rancher Tax Fairness Act can be found here.

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