After a day of senatorial stubbornness and political tussling, the Senate now seems willing to vote on a bill that would extend the Section 179 tax deduction through Dec. 31 of this year and expand it to $500,000.
The U.S. House of Representatives on Wednesday voted 378-46 to approve a $42 million package of tax breaks, including Section 179, which was allowed to lapse in 2013.
Their approval sent the bill to the U.S. Senate, who must also pass the measure before it can be signed into law by the President.
But late Thursday, the Senate appeared to balk, suggesting that they might just run out of time, according to The Hill in a story quoting Senate Majority Leader Harry Reid (D-Nev.).
Majority Leader Harry Reid (D-Nev.) said Thursday night that the Senate might not be able to pass the House tax extenders bill before the end of the year.
Reid said it was "imperative" for the Senate to pass a government funding bill and a defense spending measure before adjourning for the year but that senators would have to wait and see if a tax deal makes it to the floor.
"Everyone knows we have to do a spending bill. Everyone knows we have to do a defense bill," Reid said on the Senate floor. "Everyone knows that we’re trying to do some tax extenders. We’re trying to do that, but we’ll see."
Some senators have also said publicly that they would prefer extending the tax breaks for a longer period of time, such as two years, or even make the breaks permanent.
By Friday, however, the Senate seemed more accommodating, as Senate Finance Committee Chairman Ron Wyden (D-Oregon) predicted the Senate would vote on the bill next week.
If passed by the Senate, the bill is expected to be signed by President Obama shortly thereafter.
While progress on extending Section 179 is good news for farmers hoping for a last-minute tax break and machinery companies hoping for a late sales windfall, the uncertainty of the situation continues to be frustrating for farmers and others in agriculture.
“When [Congress] dilly-dallies and they kick the can down the road, how do you make intelligent business decisions,” says farm machinery expert Greg Peterson, who is based in Minnesota. He is scheduled to speak about Section 179 with Farm Journal’s tax expert Paul Neiffer on AgriTalk at 10:30 a.m. CST on Monday. (The show can also be heard live online at www.agweb.com/agritalk/.)
In Peterson's work as Machinery Pete, he has seen how implement dealers and auction houses have pushed more and more sales events to late in the year, with the expectation of getting higher prices from farmers looking for a Section 179 tax deduction. These delays on Capitol Hill, not surprisingly, are making them very nervous. “I got a text Wednesday morning from an auctioneer asking what I had heard on Section 179,” says Peterson. “He knows they are exposed.”
Some machinery companies are trying to address the uncertainty of the tax situation with special deals. Summers this week said that it would give farmers who buy equipment a voucher for factory credit of up to 15 percent of the machinery’s list price if Congress fails to boost the Section 179 limits to at least $100,000 in 2014.
“We think American farmers have earned a break on year-end equipment purchases, even if Washington hasn’t made up its mind about Section 179,” said Brian Perkuhn, vice president of sales for Summers. “Now, customers can be more confident in buying equipment this year, knowing that they’ll be receiving some type of credit for the investment.”
How important is the Section 179 deduction to you? Leave your comments on the Section 179 thread on the AgWeb discussion boards.