BLOOMINGTON, Ill. — No one can yet say for certain what changes to the federal tax code and estate transfer laws might be forthcoming under a revised federal tax plan, which is currently under consideration by the Biden administration. Early drafts of the proposal, however, contain elements that contain significant impacts on farmers. As a result, food and agriculture business advisory firm K-Coe Isom is partnering with the Illinois Soybean Association (ISA) to provide free “tax expertise on demand” to support Illinois farmers who might be impacted by the proposed tax changes.  

The project, which runs through Dec. 31, provides free tax education and consulting services for farmers with questions about how the new tax plan might impact their operations and families. This is according to ISA CEO John Lumpe, who said farmers who are not prepared for some of the proposed changes face the potential loss of their financial stability.

“We are partnering with K-Coe Isom because we partner with experts, and we want to be able to pass this important information on to farmers. This (proposal) is ever-evolving,” said Lumpe. “The estate tax proposal is ongoing, and to me it is a critical issue. As these proposed changes come about, we just want our farmers to be aware of the things they can do today to get ready in case any of these changes do go into effect.”

The free services include a tax hotline and 30-minute consultations with a K-Coe Isom tax expert. On-demand webinars with updated information on the evolving tax plan are also provided.

“Changes are occurring not quite on a daily basis. Things are moving too fast, and there’s not a lot of people working for the benefit of farmers and for consumers in general on this whole issue. This is where the people at K-Coe Isom can really lend their expertise,” said Lumpe. 

In an October 7 webinar hosted by the ISA, K COE ISOM manager Beth Swanson said there are many proposed changes to the federal tax code and estate transfer laws that impact farmers and farm families. She cited a recent University of Illinois study that showed estate taxes currently impact about three-tenths of one percent of Illinois farmers. However, closer to four or five percent of Illinois farmers would likely be impacted by the Biden administration’s reported proposed estate tax exemption of $5 million, Swanson projected. 

Swanson cautioned that under new oversight measures recommended as part of the House tax plan, the only way to legally remove assets from an estate would be via outright gifts or by transferring assets in irrevocable trusts to certain other trusts. She advised speaking with a financial advisor “within the next 45 days or sooner” to learn how assets can be legally protected under the House-suggested tax code changes. 

“We are also concerned because it is unclear from the legislative language whether farm real estate owned by an individual actively engaged in farming but leased to a third party is still considered an asset or a passive asset,” said Swanson. “If you have plans to sell or transfer any of your assets in the next few months or years, we definitely recommend you talk to your advisor as soon as you can about how you can accelerate that timeframe.”

To take advantage of the free resources, Illinois farmers can dial the tax hotline at (800) 768-0056 for the opportunity to have a brief discussion with an expert about the tax legislation. Callers can also schedule a free 30-minute tax consultation with a professional who specializes in a specific area (such as estate planning, trust work, farm programs, farm tax, etc.), to go deeper in analysis and discussion of tax legislation impacts and guidance for the caller. 

For more information on these services and resources, visit ilsoy.org/tax-resources.