Farmers and ranchers claiming a small business partnership will no longer get the streamlined tax-filing exception currently available under existing tax law after lawmakers repealed the tax-filing advantage set to take place in 2018.
Many farmers and ranchers are unaware of the coming changes because the law was hidden in the Bipartisan Budget Act of 2015 not included in the Tax Bill where it would have come under more scrutiny of those looking for changes in tax.
“This was introduced by a House member from Ohio on behalf of a group of tax industry individuals, such as attorneys and tax preparers, who were disgruntled over not getting the $2,000-$3,000 [per case] they could charge to do the more complicated tax returns for small business partnerships. It was neatly tucked away, hidden, in a budget bill until it became law,” Neil Harl, professor of Agriculture and Life Sciences at Iowa State told Southwest Farm Press.
The small business partnership provision for agriculture has been an option for farmers to avoid filing the Form 1065 partnership tax return. Though current law farmers and ranchers can claim income on their personal Form 1040 tax return.
Filing a 1065 partnership tax return is an expensive, lengthy and complex tax filing requirement that usually requires the assistance of a tax attorney or tax preparer familiar with corporate partnerships.
Harl said there should be more transparency within the government to allow debate and discussion of laws before they are intentionally hidden in other bills and only made known after the fact.
“The tax code changes authorized by the Bipartisan Budget Act of 2015 must be repealed by lawmakers. It’s the only thing that will stop this from happening,” Harl said.