Earlier this year, IRS issued a final rule on “Information Reporting Requirements Payments Made in Settlement of Payment Cards and Third Party Network Transactions” (6050W for short). Many of you have been eagerly awaiting a final word regarding the reporting obligations of markets operating [...]]]> An update from FMC, for farmers’ markets that accept SNAP:

Earlier this year, IRS issued a final rule on “Information Reporting Requirements Payments Made in Settlement of Payment Cards and Third Party Network Transactions” (6050W for short). Many of you have been eagerly awaiting a final word regarding the reporting obligations of markets operating scrip systems. Are they required to issue 1099s to each individual farmer to whom they reimburse token purchases?

Since early spring, FMC has been engaged in discussions about potential interpretations and implications, and, with the help of pro bono legal guidance and the research efforts of members like the Farmers’ Market Federation of New York, gone back and forth with officials in IRS and USDA. In early June, staff in Maine Representative Chellie Pingree’s office took the lead on a letter on behalf of fourteen House members urging IRS to clarify their interpretation and eliminate uncertainty around the requirements. By the way, below this message is a list of those Representatives, so that you can send them a thank-you email!

I’m writing today to let you know that the saga reached a new milestone last week when the IRS came to determination about how farmers markets operating scrip systems are to be considered for purposes of reporting electronic transactions.  In short, it’s good news. Below is text, reviewed and developed in cooperation with IRS, about how they interpret the 6050W rule.

Farmers Markets Requirements Concerning IRS 6050W

A central payor in a farmers market scenario may have an obligation to issue information reports (via a 1099-K) documenting payments made to market stall merchants if their relationship meets the definition of a third party network and if the number and amount of the transactions exceeds certain thresholds.

A third party network is any arrangement which involves the establishment of accounts with a central organization by a substantial number of persons (50 or more, according to the legislative history). Third party network arrangements, in a farmers market context, may include scrip currency programs. In such arrangements, customers use electronic payment to receive approved scrip from a central payor (the farmers market), which is then exchanged for goods with individual market stall-holders, who are reimbursed by the central payor (the farmers market).  Third party network transactions are reportable only if total annual transactions with respect to a particular payee exceed $20,000 and 200 in number.


Thus, small farmers markets (those with 50 or fewer stall merchants) are not subject to 6050W because they are not third party networks.  Larger farmers markets that constitute third party networks are subject to 6050W only to the extent that payments to a particular stall merchant involve more than 200 transactions and exceed $20,000.  (Note: “transactions” refers to the exchange of scrip between farmer and farmers market, not between customer and farmer).


Documentation:
A central payor is responsible for keeping books and records to substantiate that he/she is exempt from 6050W information reporting as a third party network. The primary reasons a small farmers market would be outside the scope of 6050W would be because (1) there are not a “substantial number” of farmers (fewer than 50) to whom a central payor is making payments, (2) payments to any given farmer in the market by such a central payor do not exceed $20,000 in a calendar year or (3) transactions by any given farmer (in which the farmer exchanges redeemed scrip for cash by the central payor) do not exceed 200 in a calendar year.  Depending on the sophistication of the central payor (farmers market), much of this information is already being kept.  Information about the number of vendors to which the central payor makes payment, the number of transactions with each vendor, and the total amount paid out are all relevant items for documentation.  This information should be collected and maintained for each calendar year beginning January 1, 2011.  For more specific legal and taxation advice, farmers markets should seek services of a qualified tax professional.

More information about Internal Revenue Code section 6050W can be found on the IRS web site.  Third party networks subject to full reporting requirements under 6050W can preview form 1099-K here.

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Two weeks ago, the House passed its spending bill (“continuing resolution”) for Fiscal Year 11 – the year we’re in right now. Their bill would cut over $5.2 BILLION from agriculture – a disproportionate share of the budget! (a 22% cut, compared with 6% from other sectors.)

While the bill does [...]]]> Ohio Action Alert

Two weeks ago, the House passed its spending bill (“continuing resolution”) for Fiscal Year 11 – the year we’re in right now. Their bill would cut over $5.2 BILLION from agriculture – a disproportionate share of the budget! (a 22% cut, compared with 6% from other sectors.)

While the bill does not cut the Farmers Market Promotion Program, the House does cut severely into many programs that underpin the profitability of farmers who sell at our farmers markets and the communities that our markets serve. For example, farm credit (especially for beginning and socially disadvantaged farmers and ranchers) is severely cut, as are conservation programs (over $500 million cut out of just four conservation programs!) and many research and outreach programs. The bill completely eliminates key programs like ATTRA (the National Sustainable Information Service), the Organic Transitions Research program, and many others.

The Senate is our only hope for pushing back, and we urgently must push our Senators to do so. Please call both our senators and ask them to oppose unjust spending cuts affecting small farms and sustainable and organic farmers.

Sherrod Brown
http://brown.senate.gov/
p (202) 224-2315
f (202) 228-6321
Web Form:  http://brown.senate.gov/contact/

Rob Portman (R – OH)
p (202) 224-3353
Web Form: http://portman.senate.gov/contact_form.cfm

The bill (H.R. 1) unfairly targets programs that serve sustainable and organic farmers.  It makes deep cuts in farm credit, agricultural research, and extension.  It slashes funding provided in the 2008 Farm Bill for conservation and would terminate programs that serve beginning and minority farmers without making any cuts to commodity or crop insurance funding. The cuts are reckless and unjust, threatening economic recovery in rural communities struggling to create jobs, find new markets, and renew economic life.

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Under the Transition Incentives Program (TIP), [...]]]> On Monday, December 13, USDA Secretary Tom Vilsack announced the release of TIP Net, an online tool to help link retiring farmers who have expiring Conservation Reserve Program (CRP) contracts with beginning or socially disadvantaged farmers or ranchers who want to buy or rent land for their operations.

Under the Transition Incentives Program (TIP), administered by USDA’s Farm Service Agency, retired or retiring owners or operators with expiring CRP contracts can receive up to two additional annual rental payments if they sell or lease the CRP land to beginning or socially disadvantaged farmers who are interested in bringing the land into production using sustainable grazing or crop production methods, including transitioning to organic.

National Sustainable Agriculture Coalition » Archive » USDA Introduces Online Farm Link Tool for Beginning Farmers.

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The bill, which will require improved planning and record-keeping by food producers and processors and will allow the Food and Drug Administration (FDA) to make mandatory recalls of contaminated food, marks [...]]]> On Tuesday, November 30, a year after it was reported out of Committee, the Food Safety Modernization Act (S.510) passed the Senate, 73-25.

The bill, which will require improved planning and record-keeping by food producers and processors and will allow the Food and Drug Administration (FDA) to make mandatory recalls of contaminated food, marks the most sweeping overhaul of food safety regulations in nearly a century.

The final Senate bill includes six amendments that were worked on by small farm advocates like National Sustainable Agriculture Coalition (NSAC) and that each became part of the Manager’s amendment that the Senate has now approved.  Those include the amendments championed by:

• Senator Sanders (D-VT) providing FDA authority to either exempt farms engaged in low or no risk processing or co-mingling activities from new regulatory requirements or to modify particular regulatory requirements for such farming operations.
• Senator Bennet (D-CO) to reduce unnecessary paperwork and excess regulation required under the preventative control plan and the produce standards sections of the bill, including instructions to FDA to minimize the number of different standards that apply to separate foods, to make requirements scale appropriate, and to prohibit FDA from requiring farms and other food facilities to hire outside consultants to write food safety plans.
• Senator Debbie Stabenow (D-MI) to provide for a USDA-delivered competitive grants program for food safety training for farmers, small processors and wholesalers, with a priority on small and mid-scale farms.
• Senator Barbara Boxer (D-CA) to strip the bill of wildlife-threatening enforcement against “animal encroachment” of farms and require FDA to apply sound science to any requirements that might impact wildlife and wildlife habitat.
• Senator Sherrod Brown (D-OH) to exempt farmers from extensive and expensive traceability and recordkeeping  requirements  if they sell food directly to consumers or to grocery stores, to allow labeling that preserves the identity of the farm through to the consumer to satisfy traceability requirements, and to in most cases limit farm recordkeeping to the first point of sale when the product leaves the farm.
• Senators Jon Tester (D-MT) and Kay Hagan (D-NC) to give very small farms and food processing facilities as well as direct-market farms who sell locally the option of complying with state regulation or with modified, scale-appropriate federal regulation.

It is now being revealed that US Senators slipped up in a big way when passing the Food Safety Modernization Act on Tuesday: They added what are effectively “new taxes” into the bill, and according to the U.S. Constitution, only the House of Representatives can initiate legislation requiring new taxes.

Thus, the House is now obliged to give this food safety legislation the so-called “blue slip,” meaning that it rejects the law and sends it back to the Senate for yet another vote. This would take time and effort, of course, and the Democrats have very little of either remaining in their lame duck session.

As explained on Wikipedia (http://en.wikipedia.org/wiki/Blue_slip):

“This blue-slipping procedure, done by an order of the House, is routinely completed to enforce its interpretation that the House is the sole body to introduce revenue or appropriations legislation. The failure of the House to consider the legislation means it cannot become a law. This tactic has historically proven to be of great use to the House and, as a practical matter, the Senate does not introduce tax or revenue measures to avoid a blue slip.”

In other words, the House wants to remain the sole originator of all new taxes and will therefore need to “blue slip” S.510 in order to slap the hands of Senators who are trying to enact their own new taxes under the bill. The upshot of this is that this fight is not yet over. Unless the House makes an unprecedented exception to this blue slip rule, this legislation will apparently need to go back to the Senate floor for another vote.

This story was first reported by RollCall.com (http://www.rollcall.com/news/-20101…) which says, “The debacle could prove to be a major embarrassment for Senate Democrats, who sought Tuesday to make the relatively unknown bill a major political issue by sending out numerous news releases trumpeting its passage.” (http://www.rollcall.com/news/-20101…)

According to Roll Call, “The blue slip could lead to one of two likely outcomes. Senate Majority Leader Harry Reid (D-Nev.) could simply drop the issue and let the next session of Congress start from scratch…”

“Or he could try to force the issue in the Senate after the House passes a new version of the bill. But in order to do that and still tackle the other issues, he would need a unanimous consent agreement to limit debate.”

But unanimous consent is impossible thanks to the heroic efforts of Senator Tom Coburn (R-Okla) who has stood firm on his belief that this bill is too large, too expensive and puts too much of a burden on American farmers.

If this assessment is correct, it looks like S.510 is now dead in the water and cannot be resurrected until the next session of Congress in which there will be far fewer Democrats (there was not a single Democrat in the US Senate who opposed the bill).

Will the new incoming Senators put forth amendments like those above in the resurrected bill? These amendments protect hardworking small farmers and entrepreneurs from regulations designed to make industrially produced food safer. A food safety bill without these protections will stifle economic development in communities across the country and create hardship for small farmers in what is already a tough economy.

Sources:
Natural News
National Sustainable Agriculture Coalition

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Senate Majority Leader Harry Reid (D-NV) signaled his intent late Wednesday night to move the Food Safety Modernization Act forward when Congress returns to session in mid-November. The bill, which has strong bi-partisan support, has been held up for weeks by [...]]]> From National Sustainable Agriculture Coalition  *Food Safety Informational Alert October 1, 2010 *

Senate Majority Leader Harry Reid (D-NV) signaled his intent late Wednesday night to move the Food Safety Modernization Act forward when Congress returns to session in mid-November. The bill, which has strong bi-partisan support, has been held up for weeks by the objection [ http://sustainableagriculture.net/wp-admin/post.php?post=6867&action=edit ] of one lone Senator, Tom Coburn (R-OK).

Reid filed for “cloture,” a motion that requires three days to ripen and then 60 votes to cut off debate and bring the measure to a floor vote. The last-minute cloture filing means that the bill could be considered as early as November 17, two days after the start of the “lame duck” post-election session. As the lame duck session in mid-November draws closer we will issue an action alert with specifics on how to press our case in the Senate.

If the measure is brought to a vote in the Senate, it is likely to pass. However, with so many other prominent issues left for consideration during the short lame duck session, including the defense authorization bill, all of the FY 2011 appropriations bills, extension of unemployment insurance, and a bill to extend some of the Bush tax cuts, the Food Safety Modernization Act will be in a major fight for floor time.

Wednesday night’s action, however, is the first sign of life the bill has had in weeks. Without the cloture move, the bill was expected to be dead for this Congress. Now the bill has a chance of clearing the Senate. If it does, it would give the House the opportunity to at least consider passing the Senate bill in December and letting it become law.

Even though the House passed its own very different bill over a year ago, there will not be time in the lame duck session for the House and Senate to conference a bill and then take the negotiated bill back to the floor of both bodies for a vote. Thus in all likelihood there is only one way that a bill becomes law this year – the Senate has to pass its measure and then the House has to pass the Senate bill.

If the Senate approves cloture, as expected, the amendments that get debated after that will likely themselves to become a matter of negotiation. While there are some amendments that may or may not get a vote, the so-called Manager’s amendment will be considered and approved and we also fully expect that the Tester-Hagan amendment will be debated and voted on.

NSAC supports the Manager’s amendment to the bill, which includes language based on five NSAC-supported amendments [ http://sustainableagriculture.net/blog/senate-food-safety-bill/ ] sponsored by Senators Sanders, Bennet, Brown, Stabenow, and Boxer that address small and mid-sized farm, local food, and conservation concerns.

We also support the Tester-Hagan amendment, and, if it passes we support final passage of the bill and would support House passage of the same measure.

The Tester amendment creates size-appropriate alternatives to the underlying bill’s “preventative control plan” requirements for very small processing facilities (both on-farm and off-farm) as well as for farms with less than $500,000 in annual sales that primarily direct market their products to consumers, stores, or restaurants and do so within state boundaries or within 400 miles of the farm.

The amendment would also exempt from produce standard regulations farms with less than $500,000 in annual sales that primarily direct market their products to consumers, stores, or restaurants and do so within state boundaries or within 400 miles of the farm.

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