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Section 179 Small Business Taxes

Before August recess, the Senate Finance Committee approved a number of expired tax provisions that will provide more certainty for forest stakeholders, coming one step closer to making key tax provisions permanent.  The legislation includes two provisions, known as Section 179, that let small businesses deduct major capital expenditures over just a few years, rather than the full life of the equipment they buy. 

"Section 179 and bonus depreciation lend stability and help minimize risk in an   unpredictable business, forest landowners rely on tax provisions that allow them to manage their cash flow and put their money back to work for their businesses and local economies,” commented Bill Siegel, FLA Regional Vice President and timber tax attorney. “These tax provisions are absolutely beneficial to private forest landowners of all sizes.  If Section 179 could be made permanent, it would provide assurances that would greatly help solidify financial planning for the future for private landowners.” 

Both House and Senate leaders have stated that extenders should be made permanent and action should be taken this fall rather than waiting until December.  The House and Senate are expected to push a package of these extenders earlier than usual this year and to make them permanent, once and for all.

Tax Provisions

Congressional Action Needed: Timber Tax Provisions Must Be Retained.  Congressional Action Needed to Make Tax Extenders Permanent

Though comprehensive tax reform is not likely to be enacted in 2015, key Members of Congress are still exploring the possibility of some limited tax changes. Lawmakers and their staffs must continue to be educated about the vital role that investment and timber tax provisions play in the nation’s economy as well as forests sustainability.

In regards to small and family businesses, a host of tax extenders are bundled into two different versions of tax relief legislation. The Senate must pass its version of the Tax Relief Act and then the House and Senate need to work out the differences in the two versions and pass legislation sooner rather than later.

Congressional Actions to Date

  • No viable comprehensive tax reform legislation has been introduced, but leaders of the tax committees (House Ways and Means and Senate Finance) have begun discussions on the outline of tax reform.
  • H.R. 636, America's Small Business Tax Relief Act of 2015 passed the House in May
  • S. 1946, was approved by the Senate Finance Committee in July.
  • Both bills included a number of expired tax provisions that will provide more certainty for forest stakeholders, coming one step closer to making key tax provisions permanent.

Key Messages

  • Thank your House Representatives for passing H.R. 636.  Ask them to work quickly with the Senate on getting legislation passed in Congress to provide permanent tax relief.
  • Tell you Senators to co-sponsor and bring to a vote, S. 1946.  Ask them to work quickly with the House on getting legislation passed in Congress to make tax extenders permanent.
  • Remind policy makers that any tax reform must recognize common sense treatment of private forests and that it is vital to retain the current tax treatment of timber to preserve the economic viability and public benefits of private forest ownership.

o   The timber tax provisions recognize the treatment of private forests as a long-term investment in real property and address in a practical way the costs and risks of maintaining healthy forests.

o   The timber tax provisions help working forest owners create jobs, provide environmental benefits and help Americans reach financial goals.

o   Repeal of the timber tax provisions would adversely impact jobs, the economy, and public benefits.

 

Issue Background:

While enactment of tax reform has little chance this year, the ideas promoted by House and Senate tax leaders will be on the table when Congress gets serious about moving tax reform. Members of Congress need to know that tax proposals that harm private forests landowners and timber are nonstarters.

February 27, 2014: Tax Reform Discussion Draft Released

Chairman Dave Camp of the House Ways and Means Committee released his tax reform discussion draft Wednesday, February 26th.  The draft hit most industry groups hard including forestry where all of our 3 most important tax expenditures were repealed.  It also takes away the benefit to timber REIT's.  As you would expect, this is alarming but here is where things stand right now.  Tax reform will not pass in this congress.  Speaker Boehner laughed when asked during a press conference if he would bring tax reform to the floor this year and Senator Mitch McConnell declared it dead.  However, it is widely believed that this discussion draft from Camp has laid the foundation for reform in the next congress so we must work on the appropriate members of congress to ensure we retain our expenditures. 

FLA and Stakeholder Actions

January 2014: A coalition of forestry organizations including Forest Landowners Association sent a letter to the Senate Finance Committee outlining the importance of our timber tax expenditures.

April 2013: Bi-Partisan Support for Timber Tax Provisions Urged by 30 Members of Congress and more than 50 Forestry Organizations. Two letters were sent to the House Ways and Means Committee; one from their piers in Congress and a second from the forestry community.

A letter spearheaded Reps. Benisheck (R-MI), Michaud (D-ME) and Sewell (D-AL) was singed by thirty members of Congress and sent to Chairman Camp and Ranking Member Levin urging support for key timber tax provisions of the Ways and Means Committee’s bipartisan Working Groups as they review and evaluate the tax code with an eye toward comprehensive tax reform.  The letter specifically outlined three key timber tax provisions as critical for maintaining productive, healthy, working forests.

A follow-up letter was sent by the forestry community urging the Committee to consider, as Congress has long recognized, that timber is a long-term investment, decisions to invest in timber were made decades ago, and changing the tax treatment would significantly and negatively impact investments in working forests that contribute to economic growth and environmental quality.

The letter emphasized that the timber tax provisions have provided long-term, stable returns for the many individuals who directly or through pension funds rely on their forestland investment for retirement and other needs. At the same time, these timber tax provisions have well served the nation, consumers and manufacturers, forest owners and the environment. 

 

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