Iowa’s senior U.S. senator put forth legislation today to protect farmers during bankruptcy.
Republican Chuck Grassley says when Congress passed bankruptcy reform in 2005, it allowed farmers to file Chapter 12. Under Chapter 12, farmers can sell portions of their property during reorganization without having to pay capital gains tax.
Grassley says the legislation made it clear that the IRS was not the top creditor during a farm’s reorganization. However, in May 2012 the U.S. Supreme Court ruled 5-4 that the IRS must be paid before other creditors.
“The Supreme Court screwed everything up by ruling that the law may have been changed in the bankruptcy code, but it was not changed in the tax code,” Grassley says. “Which then left farmers vulnerable to the same IRS”
Grassley says the bill would stop the Supreme Court from overriding Congressional intent.
Grassley is introducing the legislation with Democrat Sen. Al Franken of Minnesota. Franken sits on the Senate Judiciary Committee, which Grassley chairs.
Grassley says Senate legislation requires bipartisan support since every bill needs 60 out of 100 votes to advance. Currently the GOP has 54 senators.
“Sen. Franken is a person very interested in supporting the family farmer, and he’s also a member of the judiciary committee where this bill will have to be decided,” Grassley says. “So it’s kind of a natural for me to seek him out, beyond just the fact that you have to have some bipartisanship.”