Washington D.C.-- After co-sponsoring a bill last week designed to protect farmers from an Internal Revenue Service decision that could have hit farmers with huge, unexpected tax payments this year, U.S. Senator Mike Enzi applauded the agencies change of mind this week.
Enzi is an original co-sponsor of the Family Farm Alternative Minimum Tax Relief Act of 1997. The measure would allow farmers to pay their taxes on income from contracts after they receive payment, rather than pay taxes at the time the contract is made.
The most recent IRS announcement means farmers will not need to change their tax filing for 1996.
Enzi said the IRS issued a memo last year announcing its intention to require farmers who use cash-basis accounting to figure their income in the year a contract is made, rather than in the year when the product is delivered and payment received. This position on the Alternative Minimum Tax (AMT) would require a farmer who agrees in 1996 to sell his or her beets, for instance, to pay taxes on the contracted amount in 1996, even though delivery and payment don't occur until 1997.
"I'm pleased the IRS has decided not to proceed at this time with their decision on the AMT. This will give us time to pass a solid piece of legislation that will help clean up the tax code," said Enzi.
"By co-sponsoring this bill I believe I'm taking a good first step on the path of positive tax reform and my goal of reigning in the IRS. It just doesn't make sense for family farms to be required by the IRS to pay taxes on money they haven't received yet," said Enzi.
Enzi would also like to expand the legislation to help other small businesses, not just farms.
"This legislation is a good start, but I believe we should look further at reforming or repealing the AMT. Small businesses in general, are buried in federal paperwork. Compliance with the AMT just adds to that mound," he said. "Small business is vital to Wyoming and its economy. When our small businesses are hurt by an overly burdensome bureaucracy we are all affected in some way."
Enzi said the AMT reform bill will not hurt government coffers.
"The bill I am co-sponsoring does only good things for the taxpayer," he said. "According to the Congressional Budget Office, the bill will have only 'negligible' impacts on revenue inflow."