March 2018

March 2018

Fix to "Grain Glitch" is Now Law

President Trump signed the Consolidated Appropriations Act, 2018, H.R. 1625, on March 23, 2018. At the end of the 2,232-page legislation, Congress included a section written to “fix” the “grain glitch.” This is, of course, the provision in the Tax Cuts and Jobs Act that provided significantly higher tax deductions (in most cases) to patrons who sold commodities to cooperatives rather than to non-cooperatives.

The 17-page “fix,” while attempting to level the playing field, adds even more complexity to an already convoluted section of the new tax law, IRC § 199A. The fix retroactively takes effect, beginning January 1, 2018. This wipes from existence the provision giving cooperative patrons a 20-percent deduction based upon gross sales.

Non-Coop Sales

Under the fix, the tax benefit to a farmer who sells grain, for example, to a non-cooperative does not change. These farmers are generally entitled to the new 20 percent 199A(a) qualified business income (QBI) deduction, calculated based upon their net income from the sale. Their overall 199A deduction is limited to 20 percent of taxable income (minus capital gains). It is also restricted by a wages/capital limitation if their income exceeds $157,500 for singles and $315,000 for those who are married filing jointly.

Continue reading here for more detail and several examples.

New Law Will Offer More Healthcare Options for Iowans Priced out of Individual Market

On April 2, 2018, Governor Reynolds will sign SF 2349 into law. This new law is designed to address the mounting difficulties faced by many Iowans seeking to purchase health insurance on the individual market. Specifically, the law is designed to offer two new healthcare benefit options for small employers and sole proprietors, the groups most impacted by Iowa’s healthcare crisis. These options include allowing Farm Bureau and Wellmark Blue Cross & Blue Shield to offer new "health benefit plans" and allowing small employers (including sole proprietors) to join together to create Association Health Plans to offer group health coverage to their employees. 

New “Health Benefit Plans”

The bill would first create Iowa Code § 505.20, a provision to allow Iowa Farm Bureau to offer new “health benefit plans” to its members. These plans would “be deemed to not be insurance” and would thus be exempt from Affordable Care Act requirements and Iowa Insurance Division regulation. The plans would be self-funded and subject to third-party administration by Wellmark Blue Cross & Blue Shield.The Legislative Services Agency, in its Fiscal Note for the bill, estimates that the plans would cost roughly $5,000 per year per family.

Continue reading here.

Spending Bill Exempts Animal Farms from Air Emission Reporting

The Consolidated Appropriations Act, 2018 (Omnibus Bill), signed into law, on March 23, 2018, has exempted the reporting of "air emissions from animal waste at a farm" under CERCLA. This exemption is included in Title XI of the Act, called the “Fair Agricultural Reporting Method Act” or “FARM Act." 

This exemption was enacted because of a decision on April 11, 2017, by the United States Court of Appeals for the District of Columbia that vacated an EPA final rule that had been in place for nine years. The rule—called the CERCLA/EPCRA Administrative Reporting Exemption for Air Releases of Hazardous Substances from Animal Waste at Farms—exempted most farms from CERCLA and EPCRA reporting requirements for air releases from animal waste. The court ruled that the EPA had exceeded its statutory authority in granting the exemptions. The court order subjected approximately 44,000 new commercial animal farms to reporting requirements the EPA had characterized as "costly and burdensome."

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