Monday, August 13, 2007

House Puts Brakes on Tax Prep by Federal Farm Lending Bureau

The AICPA commended the House of Representatives for removing a provision in the Farm Bill Extension Act of 2007 which would allow the Farm Credit Service, a government-financed entity, from providing supplementary financial services such as small business accounting and tax preparation to a sizable number of non-farm borrowers. Barry Melancon, AICPA President, said that the FCS, with its cost advantages (such as no federal tax liability) could have put small CPA firms in rural areas at a major and unjustified disadvantage. Melancon now switches attention to the Senate, promising to watch the Senate finance committee very closely.

One presumes that Senate Finance chair Max Baucus (D-MT) and minority leader Charles Grassley (R-IA), being from farm states, would be loath to reinstitute the FCS provision. At the same time, the discomfort of farm state CPAs over the original provision probably was justified; though I am skeptical whether the quality of work by FCS employees would have matched that of rural CPAs.


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