The Senate last week unanimously approved legislation by Judiciary Committee Chairman Chuck Grassley (R-Iowa) and Senator Al Franken (D-Minn.) clarifying Congress’ intent to allow family farmers to more easily reorganize their finances when they fall on hard times, according to a press release on Friday. As a part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Congress passed a provision to address the unique financial situations of family farmers who are reorganizing their assets following bankruptcy. However, a 2012 Supreme Court ruling found that the 2005 law, as written, failed to achieve Congress’ express goal of helping family farmers. Grassley and Franken’s Family Farmer Bankruptcy Clarification Act of 2017 rectifies the Supreme Court ruling by clarifying congressional intent. The Family Farmer Bankruptcy Clarification Act reiterates Congress’ earlier action to enable bankrupt family farmers reorganizing their debts to treat capital gains taxes owed to a governmental unit, arising from the sale of farm assets during a bankruptcy, as general unsecured claims. It also removes the Internal Revenue Service’s veto power over a bankruptcy reorganization plan’s confirmation, giving the family farmer a chance to reorganize successfully.
