The
Honorable [full name]
United
States Senate
Washington,
DC 20510
Dear
Senator
:
Senator Jeff Sessions introduced the Timber Tax Simplification Act of 2003 (S. 968), which corrects an inequity in Section 631(b) of the Internal Revenue Code affecting the sale of timber. Lindy Paull, Chief of Staff of the Congressional Joint Committee on Taxation (JCT), has said that this correction will have a negligible effect on federal revenue, and the JCT has added the modification to their Tax Simplification List. We ask that you congratulate Sen. Sessions on this legislation, and act today to co-sponsor S. 968.
Under
current law, private non-industrial landowners who are occasional sellers of
timber are often classified by the Internal Revenue Service as
"dealers," which ensures they must comply with the rules of Internal
Revenue Code Section 631(b) in order to obtain capital gains treatment.
Section
631(b) requires these sellers to "retain an economic interest" in
their timber until it is harvested.
This means the sellers must make the sale under the terms of a contract
that ensures that the seller bears all the risk. Additionally, "retaining an economic interest" means
the seller is only paid for timber that is harvested, regardless of whether the
terms of the contract are violated. The
burden is disproportionately placed upon the seller and this arrangement may
encourage fraud, abuse, and waste of valuable timber resources by the timber
buyer.
The
Timber Tax Simplification Act of 2003 will provide greater consistency by
removing the exclusive nature of the "retained economic interest"
requirement in IRC Section 631(b). This
change has been supported or suggested by a number of groups for tax
simplification purposes, including the Internal Revenue Service and the Land
Trust Alliance.
Please
add this legislation to your “can-do” agenda in this session of the 108th
Congress. For further information you
may wish to contact Heather Sawyer
of Sen. Sessions staff (202-224-4124).
Sincerely,
The
Honorable [full name]
United
States House of Representatives
Washington,
DC 20515
Dear
Representative
:
Representative Mac Collins introduced the Timber Tax Simplification Act of 2003 (H. R. 974), which corrects an inequity in Section 631(b) of the Internal Revenue Code affecting the sale of timber. Lindy Paull, Chief of Staff of the Congressional Joint Committee on Taxation (JCT), has said that this correction will have a negligible effect on federal revenue, and the JCT has added the modification to their Tax Simplification List. We ask that you congratulate Rep. Collins on this legislation, and act today to co-sponsor H.R. 974.
Under
current law, private non-industrial landowners who are occasional sellers of
timber are often classified by the Internal Revenue Service as
"dealers," which ensures they must comply with the rules of Internal
Revenue Code Section 631(b) in order to obtain capital gains treatment.
Section
631(b) requires these sellers to "retain an economic interest" in
their timber until it is harvested.
This means the sellers must make the sale under the terms of a contract
that ensures that the seller bears all the risk. Additionally, "retaining an economic interest" means
the seller is only paid for timber that is harvested, regardless of whether the
terms of the contract are violated. The
burden is disproportionately placed upon the seller and this arrangement may
encourage fraud, abuse, and waste of valuable timber resources by the timber
buyer.
The
Timber Tax Simplification Act of 2003 will provide greater consistency by
removing the exclusive nature of the "retained economic interest"
requirement in IRC Section 631(b). This
change has been supported or suggested by a number of groups for tax
simplification purposes, including the Internal Revenue Service and the Land
Trust Alliance.
Please
add this legislation to your “can-do” agenda in this session of the 108th
Congress. For further information you
may wish to contact Bo Bryant of Rep. Collins staff (202-225-5901).
Sincerely,