[Congressional Record Volume 144, Number 121 (Monday, September 14, 1998)]
[Senate]
[Pages S10320-S10321]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HARKIN (for himself and Mr. Johnson):
  S. 2467. A bill to amend the Internal Revenue Code of 1986 to 
increase the years for carryback of net operating losses for certain 
farm losses; to the Committee on Finance.


                            tax legislation

  Mr. HARKIN. Mr. President, today I am introducing legislation for 
myself and Senator Johnson providing farmers with the opinion of 
receiving a refund from taxes paid in the past 10

[[Page S10321]]

years for their current operating losses. Congressman John Tanner of 
Tennessee is introducing an identical measure in the House.
  Farmers are suffering huge losses through no fault of their own. No 
other business has less control of the price they can receive for what 
thy produce. Farmers cannot control the world's weather or the World 
economy. But, those factors determine the price of corn, soybeans and 
wheat. The Freedom to Farm bill passed in 1997 sharply reduced the 
farmer's safety net. And, now, farm prices are crashing to levels not 
seen in decades, to levels never seen before if we adjust for 
inflation. Many farmers are going to have a very difficult time being 
able to acquire the funds needed to plant their crops in the coming 
year or maintain their annual operations. Many farmers could lose the 
farms that have been in their families for generations. And, the 
economic difficulty is far broader. It is already having a terrible 
ripple effect on the economies of rural areas. Layoffs are starting to 
occur at agricultural equipment manufacturers and in stores in small 
towns. But, we are just at the beginning stages of what could become a 
very severe downtown in rural America.
  A number of Senators and I are proposing a series of modifications in 
agricultural programs to help alleviate the problem. But, I believe the 
Congress should also pass a provision broadening existing law allowing 
farmers to recover taxes paid in the past to cover their net operating 
losses.
  Under existing law, businesses including farmers can be reimbursed 
for their business losses by receiving a rebate for taxes paid in the 
prior 2 years, 3 years in cases where there was a natural disaster. Now 
we are facing a large economic disaster that can really sink rural 
America.
  There are widely supported proposals to allow farmers to invest some 
of their profits for up to 5 years without being taxed till the money 
is used in poor years, effectively a type of income averaging. That is 
fine. But, what is more desperately needed at this time is more 
immediate assistance.
  I propose that family farmers be allowed the option to get a rebate 
from the taxes that they paid over the past 10 years covering up to 
$200,000 in operating losses rather than the two years allowed under 
current law. Many farmers cannot receive a rebate for their operating 
losses because they were not able to make any taxable profits in the 
last few years. The benefit would only go to farmers whose families are 
actively engaged in farming and whose business activity is mostly 
farming. The amount of the rebate would be dependent on the amount of 
the loss and the tax rate paid by the farmer for the paid taxes that 
are being restored.
  The provision would cover losses occurring in 1998 or 1999. If the 
measure passed this year, farmers would be able to calculate their loss 
early next year and quickly receive a rebate from the IRS for the taxes 
paid in earlier years.
  This proposal provides a significant amount of relief when it is 
needed early next year. It will help many farmers acquire some of the 
funds they need to plant.
  Current law already allows a few taxpayers in certain circumstances 
to go back and recover taxes that they paid for 10 years. I believe 
that it should be broadened to cover farmers in this difficult time. In 
fact, there is a precedent in the 1997 Taxpayer Relief Act in which 
Amtrak was allowed to use net operating losses of their predecessor 
railroads from over 25 years in the past.
  I urge that when the Congress considers a tax bill, this provision be 
considered and passed.

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