A host of national farm groups on Monday put pressure on lawmakers to move forward on expired tax extenders and the Section 179 provision, asking for immediate attention as the year draws to a close.
Higher expensing levels under IRS Section 179, for the past two years, have allowed farmers and business owners to take the full depreciation deduction of items such as machinery in the current tax year, with a maximum deduction of $500,000 and a phase-out threshold of $2 million.
Without the higher levels, Section 179 is scheduled to fall to $25,000 with a $200,000 phase-out. Without action before the end of the year, it will fall to that level for the 2015 tax year.
The letter supporting higher expensing levels has nearly 40 signatories, including the National Cattlemen's Beef Association.
"Farmers and ranchers like myself rely on a stable and predictable tax code in order to plan purchases, make investments, and grow their businesses," NCBA President Philip Ellis said in a statement regarding the letter. "Each year producers make significant financial determinations, and Congress' failure to act on permanent tax reform has placed greater reliance on extender legislation over the past few years."
Earlier this year, the Senate Finance Committee passed a tax extenders package covering Section 179, but it has not been considered by the full Senate. The House Ways and Means Committee passed their own provisions to approve higher Section 179 levels in February, following that closely with full House approval.
That provision, H.R. 636, America's Small Business Tax Relief Act of 2015, would make higher Section 179 levels permanent. The committee also proposed several other bills to extend tax incentives.
Though the letter notes that groups "appreciate the attention and debate given to tax extenders throughout the year," failure to act will add to uncertainty in the ag industry.
That uncertainty is because the situation has the makings to become re-run of last year, when Congress passed tax extenders to cover tax year 2014 in December. That left little time for farmers and business owners to make purchasing decisions.
The letter also notes that higher Section 179 levels provide an incentive for farmers and ranchers to invest in their businesses, and offers the benefit of reducing the record-keeping burden associated with depreciation.
In addition to higher Section 179 levels, the signatories asked Congress to reinstate the expired 50% bonus depreciation for the purchase of new capital assets, including ag equipment and buildings.
"The failure to renew these expired provisions of the tax code will place additional burdens on farm and ranch families who are asset-rich and cash-poor and already face the uncertainties of weather, market prices and international competition," the letter says.