WASHINGTON — The American Farm Bureau Federation hailed the strong bi-partisan effort by members of Congress as they urged Senate and House leadership to preserve the cash accounting system farmers and ranchers rely on to grow their businesses.
“We are pleased to see members of Congress reach across party lines and stand together for farmers and ranchers who are working to build their businesses and communities,” AFBF President Bob Stallman said today.
Cash accounting gives farmers and ranchers an important tool to expand their businesses and boost local economies. But a recent proposal by the Senate Finance Committee would put a stop to this by requiring all businesses with annual receipts totaling $10 million to switch to the accrual method. Senators and representatives from both sides of the aisle warned this would “create significant long-term financial hardship.” In letters to both House and Senate leadership, members from all 50 states called the cash accounting system fundamental to the success of small businesses across rural America. The letters were signed by 46 senators and 233 representatives.
Under an accrual accounting system, small businesses would be taxed on non-existent income, thereby reducing their cash flow for operating costs and limiting opportunities for expansion. The added financial burden would require many to take out loans to cover the liquidity problems they would face.
Forcing small businesses to full-accrual accounting will hinder both profits and job creation in regions of the country that are still suffering from the economic downturn. Farm Bureau enthusiastically supports preservation of current cash accounting rules.