Bill allows tax deferred farm disaster accounts
A bill introduced in the U.S. House this week allows farmers to establish tax-deferred farm savings accounts that could be drawn from during tough times.
“I guess you might compare it to an IRA or an HSA,” said Representative Rick Crawford (R-Ark.), who sponsored the legislation, “but this is strictly for the operation of your farm.”
The bill limits tax deferred deposits of up to $50,000 a year with an account cap of $250,000, Crawford told Brownfield Ag News Wednesday. The funds are to be used as needed for incidents that may have been covered in the past by government disaster payments.
“You draw out for the operation of your farm at a time when you sustain a disaster that may or may not even be a federal declaration or even a state declaration or whatever,” explained Crawford.
The accounts, said Crawford, are intended for emergency money in lieu of ad hoc disaster payments which he says are harder to come by.
“We’re looking at this as a way essentially for farmers to get a little bit of the tax benefit for implementing a risk management strategy that they can utilize at their own discretion, obviously with those safeguards that we talked about before,” he said, “but it puts the taxpayer at no exposure.”
The Farm Risk Abatement & Mitigation Election – FRAME – Act provides for penalties when the account is used for non-farm related expenditures such as vacations, according to Crawford. Contributions to the accounts, capital gains and dividends, he said, are to be tax-deferred.
AUDIO: Congressman Rick Crawford (11 min. MP3)
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