A new rule from the IRS has drawn the ire of several congressmen, who say it would hit farmers so hard that many would have no choice but to sell the family farm.
U.S. Rep Randy Hultgren (Plano, IL) is among a number of Congressmen opposing a new IRS rule and, according to News Network in “Congressmen plan to defund new IRS rule making more farms eligible for ‘death tax,’” they are fighting back with legislation that would defund enforcement. The new IRS rule counts interest in the value of family farms that would increase the amount of federal estate taxes paid by the next generation by as much as 40%. Hultgren’s tactic would block the IRS from using any funds to enforce it.
Hultgren said the new tax regulation will, in effect, assist the big corporate farms that have the resources to purchase the land that small farmers would need to sell just to pay the tax. Those with the cash can come in and buy at fire sale prices: the large corporate-owned farms, he said.
The state of Illinois has an inheritance tax of 16% that begins at $4 million in total assets.
The federal government has enacted measures to help farmers who would be hit with a large estate tax. However, this is really just a loan to pay off the tax over time with interest. In the past, a small number of family farms have been subject to the federal estate tax due to exemptions and loopholes. The Tax Policy Center reports that only 120 farms paid the estate tax in 2013. The new tax regulation, Hultgren said, might see that number skyrocket. He thought the cost of estate planning could be reinvested into the farm.
One acre of high-quality Illinois farmland is worth on average $11,737 per acre, according to The Illinois Society of Professional Farm Managers and Rural Appraisers. Any family farm with just over 460 acres would be subject to the federal estate tax, and that’s not even including the value of machinery or structures, which would add considerably to the value of the family farm.
Reference: Illinois News Network (October 19, 2016) “Congressmen plan to defund new IRS rule making more farms eligible for ‘death tax’”
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