Treasury Secretary Robert Rubin Monday defended an IRS decision to stop letting farmers use commodity contracts to level off their income and taxes from year to year.
With many growers facing stiff tax bills this year, farm-state lawmakers have been pressing the Clinton administration to overturn the decision this fall by the Internal Revenue Service.
Treasury’s tax policy office “informs me that the IRS’ ruling correctly interprets the current law,” Rubin wrote in letters to members of Congress Monday. But he said he would support efforts in Congress to overturn the IRS decision with legislation rewriting tax law.
The commodity contracts have become a popular way for farmers to defer income from good years into years in which they expect their incomes to be lower. Many farmers have enjoyed good crops and high commodity prices this year and normally would defer some of the income to 1997.