[Congressional Record Volume 145, Number 82 (Thursday, June 10, 1999)]
[Senate]
[Pages S6863-S6864]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KOHL (for himself, Mr. Burns, and Mr. Hagel):
  S. 1207. A bill to amend the Internal Revenue Code of 1986 to ensure 
that income averaging for farmers not increase a farmer's liability for 
the alternative minimum tax; to the Committee on Finance.


                      the farmer tax fairness act

  Mr. KOHL. Mr. President, I rise today to introduce the Farmer Tax 
Fairness Act, along with my farm state colleagues, Senators Burns and 
Hagel. This legislation is a targeted provision that will help ensure 
that farmers have access to tax benefits rightfully owed to them.
  As you know, farmers' income often fluctuates from year to year based 
on unforeseen weather or market conditions. Income averaging allows 
farmers to ride out these unpredictable circumstances by spreading out 
their income over a period of years. Last year, we acted in a 
bipartisan manner to make income averaging a permanent provision of the 
tax code. Unfortunately, since that time, we have learned that, due to 
interaction with another tax code provision, the Alternative Minimum 
Tax (AMT), many of

[[Page S6864]]

our nation's farmers have been unfairly denied the benefits of this 
important accounting tool.
  As you know, the AMT was originally designed to ensure that all 
taxpayers, particularly those eligible for certain tax preferences, 
paid a minimum level of taxes. Due to inflation and the enactment of 
other tax provisions, more and more Americans are now subject to the 
AMT. While other reforms are required to keep the AMT focused on its 
original mission, our legislation addresses the specific concern of 
farmers relying on income averaging. Under our legislation, if a 
farmer's AMT liability is greater than taxes due under the income 
averaging calculation, that farmer would disregard the AMT and pay 
taxes according to the averaging calculation. In this way, farmers 
would still pay tax, but would also have access to tools designed to 
alleviate the inevitable ups and downs of the agricultural economy.
  This provision is a modest and reasonable measure designed to ensure 
farmers are treated fairly when it comes time to file their taxes. I 
urge my colleague to lend their support. Thank you.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1207

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Farmer Tax Fairness Act''.

     SEC. 2. INCOME AVERAGING FOR FARMERS NOT TO INCREASE 
                   ALTERNATIVE MINIMUM TAX LIABILITY.

       (a) In General.--Section 55(c) of the Internal Revenue Code 
     of 1986 (defining regular tax) is amended by redesignating 
     paragraph (2) as paragraph (3) and by inserting after 
     paragraph (1) the following:
       ``(2) Coordination with income averaging for farmers.--
     Solely for purposes of this section, section 1301 (relating 
     to averaging of farm income) shall not apply in computing the 
     regular tax.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1997.
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