Wednesday, November 16, 2011

Just in from Washington

AFBF Urges House to Repeal 3 Percent Withholding Tax

Washington--AFBF President Bob Stallman wrote to members of the House today urging prompt passage of H.R. 674 that would repeal the 3 percent withholding tax on government payments for goods and services that is scheduled to begin in 2013.

“The new 3 percent withholding tax will apply to many Department of Agriculture payments including: direct payments; countercyclical support payments; Average Crop Revenue Election, dairy support programs; and conservation programs (Conservation Stewardship Program (CSP), Conservation Reserve Program (CRP) and Environmental Quality Incentives Program (EQIP)),” Stallman wrote. “For example, if a farmer or rancher would receive an $11,000 payment for protecting streams or rivers under the Conservation Reserve Program, $330 would be withheld from the payment.”

Stallman said imposing a withholding on USDA payments will create a financial hardship on farm and ranch operations. “Farm profitability and tax liability fluctuate greatly from year to year due to weather and markets, but the tax will be withheld regardless,” Stallman wrote. “For agricultural operations that end the year without owing taxes, the withholding amounts to an interest-free loan to the government.”


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