Nov 14, 2014
ASA urges all members to contact their U.S. Senators and Representatives and express support for enactment of a tax extenders package during the lame duck session that includes extension of the $1 per gallon biodiesel tax credit, restoring the maximum amount of expensing under Section 179 to $500,000 as it was previously set in 2013, and reinstatement of the expired 50 percent bonus depreciation for the purchase of new capital assets, including agricultural equipment.
During the current lame duck session of Congress one of the few items expected to be considered is a tax extenders package. The tax extenders package is a collection of provisions that are not permanent law and expired as of Dec. 31, 2013. Earlier this year, the Senate Finance Committee approved a bill that would extend the expiring provisions for two years, while the House has proposed making some of the provisions permanent and/or limiting the extension of the temporary credits to one year. Renewing all of the breaks that expired Dec. 31, 2013, for one year would cost about $54 billion in total, according to the Congressional Budget Office. The Senate’s two-year package of 51 breaks would cost $84.1 billion, spread over 10 years.
Delaying consideration until the next session of Congress in 2015, as some lawmakers are advocating, would be problematic for tax filing season. The issues to be decided by congressional leadership include: whether or not to vote on tax extenders during the lame duck session, whether the package should be for one or two years, whether to make some provisions permanent, and whether to drop some provisions from the package.
Biodiesel Tax Credit - The biodiesel tax credit is worthy of extension given the many benefits it provides, including support for jobs, economic development in rural communities, diversity in our energy and fuel sources and reduction in greenhouse gas emissions, among others. The tax credit plays an important role in the competitiveness of the developing biodiesel industry with the long-standing, mature and entrenched petroleum industry.
Section 179 Expensing and Bonus Depreciation - Agriculture requires large investments in machinery, equipment and other depreciable assets and because of this, farmers are significantly impacted by tax code provisions such as Section 179 small business expensing and bonus depreciation. Section 179 allows them to write off capital expenditures in the year that purchases are made rather than depreciate them over time. The ability to immediately expense capital purchases also provides an incentive for farmers and ranchers to invest in their businesses and offers the benefit of reducing the record keeping burden associated with the depreciation. Section 179 small business expensing provides agricultural producers with a way to maximize business purchases in years when they have positive cash flow. Under the expired law the maximum amount that a small business can immediately expense when purchasing business assets, instead of depreciating them over time, is $25,000 adjusted for inflation. ASA supports restoring the maximum amount of expensing under Section 179 to $500,000 as it was previously set in 2013. ASA also supports reinstatement of the expired 50 percent bonus depreciation for the purchase of new capital assets, including agricultural equipment.
More information is available through ASA's online advocacy portal, the Soy Action Center, at www.shandong.tazcpm.com/learn/soy-action-center. You put in your zip code, and the Soy Action Center generates phone numbers for both of your senators and your representatives, and provides you with simple talking points to use on your call.
Please reach out to Tom Hance or Patrick Delaney in ASA's Washington office with questions, and ASA will keep you updated as this issue moves forward.