Chairman Frank Lucas today released the following statement on Scott O'Malia's last day as Commissioner of the Commodity Futures Trading Commission (CFTC). Last month, O’Malia announced he would resign to pursue other opportunities.
Smith Praises New IRS Treatment of Deferred Payment Contracts Says Congress Should Decide Question of Alternative Minimum Tax
WASHINGTON, D.C. - Oregon Congressman Bob Smith, Chairman of the House Committee on Agriculture, today praised the Internal Revenue Service's (IRS) decision not to require farmers to report income from deferred payment contracts on their 1996 tax returns for purposes of computing the alternative minimum tax (AMT).
"The IRS has rightly recognized that subjecting farmers to the Alternative Minimum Tax for deferred payment contracts was simply unfair and ill-advised. You ought not change the rules in the middle of the game, and they seem to have recognized that. While this issue has been put to rest for 1996, there's no question that it will have to be revisited in the course of the next year. This is a very important, very troubling issue for America's farmers," Smith said.
"Congress has to make clear once and for all that it did not intend to subject these contracts to the Alternative Minimum Tax. The IRS' interpretation is just flat wrong and does not take into account the unique nature of reporting income from certain commodity sales. They are trying to put a square peg into a round hole, and it just won't work. It's bad tax policy, and terrible farm policy," Smith concluded.
"The original IRS decision subjecting deferred payment contracts to the Alternative Minimum Tax was a very bad one, and a retroactive ruling such as this would have had a devastating impact on farmers and ranchers," said Charles Stenholm (D-TX), the Committee's Ranking Democrat. "I'm glad the IRS finally recognized the error of its way and was willing to reverse it. Now, it is up to the Congress to address this tax policy and resolve it once and for all."
In December, Smith and Stenholm joined former Agriculture Committee Chairman Pat Roberts (R-KS) and 29 other Members of Congress in writing President Bill Clinton to protest the IRS' decision on the tax treatment of deferred payment contracts.
Smith represents Oregon's Second Congressional District in the U.S. House of Representatives. The district, which includes most of eastern, southern, and central Oregon, is heavily dependent on agriculture. Stenholm represents Texas' Seventeenth Congressional District, a sprawling agricultural district in west central Texas.