U.S. Sen. John Thune has joined other farm state senators in opposing a proposal by the Internal Revenue Service that would impose self-employment taxes on payments for acres enrolled in the federal Conservation Reserve Program.
The South Dakota Republican joined other senators in signing a letter of opposition to the proposal Thursday that will be sent to Treasury Secretary Henry Paulson Jr., and IRS Commissioner Mark Everson. The letter said IRS officials had for years "waged an aggressive campaign" to require farmers to pay the self-employment tax on CRP payments.
A ruling by the U.S. Tax Court disagreed with that position, but the IRS challenged it in federal court and won on appeal. Bolstered by the appeal ruling, IRS officials now assert that the self-employment tax could even be applied to CRP payments for those not materially participating in farming operations.
That would include retired farmers, the letter signed by Thune said.
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