February 9, 2018


Update on Resolving Section 199A Tax Issue

By Randy Gordon, NGFA President and CEO

As NGFA member companies likely are aware, legislation to correct the unforeseen impacts of Section 199A of the Tax Cuts and Jobs Act of 2017 was not included in the continuing budget resolution that Congress enacted early this morning.

Efforts to arrive at an equitable solution were nonstop during the past week, and the NGFA and other stakeholders were very close to reaching an agreement with legislators but just ran out of time to resolve one or two remaining issues. In fact, discussions were occurring late into the evening on Feb. 7 at the highest levels of both chambers of Congress to determine if a final agreement could be reached and included in this week's spending bill.

I can assure you there continues to be a strong commitment and momentum from lawmakers in Congress and among stakeholders to arrive at a solution in the near-term so that legislative language can be attached to the next available bill moving to President Trump's desk. The U.S. Department of Agriculture also is providing its strong encouragement and support to resolving this issue quickly.

The next must-pass spending bill to be considered by Congress will be an omnibus budget package that must be enacted by March 23. But no one is sitting on their hands until then. Given the strong momentum and progress made, particularly over the last week, work is intensifying between and with the tax staff members of the Senate Finance Committee and the House Ways and Means Committee - the two tax-writing committees of Congress - to finalize an equitable solution. The objective of this work remains two-fold:
  • Replicate the tax treatment accorded to cooperatives and their farmer-patrons under previous Section 199 of the tax code, which was repealed by the new tax law; and
  • Do so in a way that restores the competitive landscape of the marketplace that existed prior to enactment of Section 199A on Dec. 22, 2017.
NGFA has been blessed and gratified to have access to top tax experts from both cooperative and independent/private company members, whose professionalism and expertise have been invaluable in assisting NGFA in analyzing various legislative proposals designed to arrive at an equitable solution as quickly as possible. These tax experts and our staff have been working virtually nonstop, including over Super Bowl weekend, to analyze and provide constructive input to Congress. We've been thanked on multiple occasions by members of Congress and their staffs for the valuable input and balanced perspectives that NGFA has brought to this complicated issue.

NGFA's determination to resolve this issue equitably and expeditiously is captured in the media statement we issued on Feb. 8:

"The National Grain and Feed Association (NGFA) is disappointed that a solution to correct the unintended consequences of Section 199A could not be completed in time to include in the continuing budget resolution being considered by Congress this week. Considerable progress has been made during the last several weeks of intensive effort toward reaching an equitable solution. The two fundamental goals of these efforts remain to replicate the tax treatment accorded to cooperatives and their farmer-patrons under previous Section 199 of the tax code, and to do so in a way that restores the competitive landscape of the marketplace that existed prior to the enactment of Section 199A on Dec. 22, 2017.

"NGFA remains committed to achieving such an outcome expeditiously. We are gratified that the many members of Congress with whom we and other stakeholders are engaged on this issue are equally committed to enacting an equitable solution as part of the next available legislative vehicle. All concerned are very cognizant of the adverse and unforeseen disruptions Section 199A already is having in the marketplace and the perverse impacts it is having on companies' business decisions. As an organization that represents both farmer-owned cooperative and independent/privately organized companies, NGFA remains committed to working intensely and diligently with Congress and other stakeholders to resolve this issue promptly."

A reminder that you can access NGFA's information and resources on this issue on our website by clicking HERE.

I look forward to the next message from NGFA to its members on this issue to be one that reports that a solution has been reached, and that legislation that includes it is on its way to President Trump for signature. There will be no let-up in our efforts to achieve that successful outcome.