Hoeven Brings Together Business Leaders to Outline His Farm and Small Business Expensing Tax Relief Act

Measure Fixes Burdensome New IRS Expensing Rules

BISMARCK – Senator John Hoeven today hosted a broadly representative roundtable in Bismarck with small business leaders in the agricultural, manufacturing and accounting sectors to outline his new legislation, the Farm and Small Business Expensing Tax Relief Act (S. 2237).

Hoeven’s bill, which he introduced earlier this month with Senator Maria Cantwell (D-Wash.), will ease the burden of unfair and onerous new regulations for farmers, ranchers and small businesses regarding expensing repairs and the purchase of tangible property like tractor attachments or new business computers under $5,000. The rules became effective January 1st.

“We heard from people across the state about the impacts the new IRS repair expensing rules would have,” said Hoeven. “Our small businesses and family farmers and ranchers cannot shoulder the costs of these IRS regulations, both in time and money, so we are working to make the new rules reasonable and workable in the real world. That means they need to reflect the real cost of repairs and personal property and not unduly burden our small businesses with more red tape.”

Before the new IRS regulation on expensing repairs and tangible property costs became effective the first of the year, small business owners and family farms could expense tangible property costs and repair costs using their discretion and relying on just a few broad principles laid out in the tax code.

Now, because of the IRS regulation, there is a new $500 limit on expensing the cost of repairs and tangible property costs. Small business owners and family farms may not expense more than $500 for the cost of standard repairs without first having to navigate a burdensome IRS maze of legal tests to see if the repair or the item qualifies for expensing.

The IRS’s new $500 limit does not reflect the real-world costs of everyday business repairs or tangible property. The Hoeven legislation will raise the limit from $500 in the new rule to $5,000 per repair or tangible property cost that can be expensed by the small business owner or family farmer. The senator’s bill also removes burdensome requirements that require small business owners to file with the Security Exchange Commission (SEC) and keep audited financial records, which is costly and prohibitive.

The Hoeven legislation puts family farmers, ranchers and small business owners on the same playing field as large corporations when it comes to expensing these types of costs, and provides relief from complex IRS expensing rules.

Hoeven sent a letter to Internal Revenue Service (IRS) Commissioner John Koskinen in January, calling on him to revise the new rules. Hoeven sent this letter after hearing from many tax professionals and constituents in North Dakota about the serious, negative consequences the new rules would have for many farmers, ranchers and small businesses in the state.

More detailed information on the new repair expensing regulations and the Hoeven-Cantwell bill can be found here. The text of the legislation can be found here.

Organizations and businesses represented at the meeting include:

  • North Dakota Department of Agriculture
  • North Dakota Chamber of Commerce
  • North Dakota Society of Accountants
  • Bismarck-Mandan Chamber of Commerce
  • Bismarck-Mandan Development Association
  • MDU Resources
  • Northern Plains Equipment
  • Johnsen Trailer Sales
  • City Air Mechanical
  • Schafer Financial
  • Klein Accounting
  • V.J. Spaedy & Company
  • Flynn & Associates, PC
  • Person & Bush
  • Ritter Adair & Associates
  • Staiger Consulting Group
  • Midwest Motor Express
  • Point CPA
  • Hedahls Inc.
  • Stoneshire Builders
  • Open Road Honda
  • BNC Bank
  • KLJ
  • Farm Credit Services
  • Senator Terry Wanzek, farmer
  • Representative Chet Pollert, elevator owner
  • Former Representative Dennis Renner, rancher