Leaders representing Minnesota agricultural advocacy groups, including the Minnesota Soybean Growers Association, signed onto a letter Monday imploring the Minnesota legislature to pass full Section 179 conformity during a potential August special session. The letter was written in response to the Legislature’s failure to pass a bonding and tax bill during July’s special session.
“By not passing full 179 conformity,” the letter reads, “farmers do not have tax certainty and continue to receive large state tax bills compared to small businesses in neighboring states in a similar tax situation.”
The proposed $1.8 billion bonding and tax bill agreed upon by the Republican-majority Senate was set to include full Section 179 conformity, along with substantial infrastructure upgrades. An agreement was reached by the majority caucuses in both the Senate and the House, but the bill failed to receive the required three-fifths vote in the DFL-majority House.
“We need to see the Legislature take full measures on Section 179 and get a bill to the governor’s desk,” said MSGA Vice President Mike Skaug. “It’s time for our elected officials to rise above partisan, election-year politics and support policies that will help Minnesota farmers and small businesses.”
While farm groups worked to successfully advocate for partial conformity in 2019, the current law still caps deductions at $25,000, far below the $1 million cap set at the federal level in the 2017 Tax Cuts and Jobs Act. The changes to like-kind exchanges in the 2019 legislative session led to myriad unintended tax consequences for agriculture. Full Section 179 conformity (retroactive to 2018 and 2019) in 2nd Special Session House File 3 aimed to fix the discrepancy. The bonding bill would make Minnesota farmers eligible for approximately $200 million in tax relief.
“Farmers are already dealing with significant economic stress due to COVID-19 and trade disruptions,” said Minnesota Corn Growers Association President Les Anderson. “While there might be no easy solutions to these headwinds, House and Senate leaders can at least provide some certainty for farmers by passing full Section 179 conformity. Time is of the essence to get this done.”
With November’s election less than 100 days away, the clock is ticking fast for Minnesota farmers, said Minnesota Pork Producers CEO Dave Preisler.
“There is still time to get this done,” he said, “but the window is closing to do the right thing for farmers and all small and medium-size businesses in Minnesota. Farmers can’t wait until 2021 – we need full conformity in August.”
The letter was signed by the Minnesota Soybean Growers Association, Minnesota Corn Growers Association, Minnesota Pork Producers Association, Minnesota Farm Bureau, Minnesota Milk Producers Association, Minnesota State Cattlemen’s Association, Minnesota AgriGrowth, AgCountry Farm Credit, Compeer Financial and Red River Valley Sugarbeet Growers Association.
“For the past two legislative sessions, AgriGrowth and its members have held full conformity of Section 179 with federal tax law as a top priority,” said AgriGrowth Executive Director Tamara Nelsen. “We are pleased to cooperate with other Minnesota ag groups to raise the profile of the immediate need for full tax conformity of Section 179 with Gov. Walz and our legislative leaders.”