Passage of the Water and Agriculture Tax Reform Act of 2019 (H.R. 807, S. 361) would help farmers and ranchers more efficiently operate mutual ditch, irrigation and water companies, according to the American Farm Bureau Federation.
“Mutual ditch, irrigation and water companies are important to agriculture because they allow farmers, ranchers and others to form collaborative businesses to install and maintain vital irrigation infrastructure,” AFBF President Zippy Duvall wrote in a letter to the legislation’s sponsors, Rep. Ken Buck (R-Colo.) and Sen. Cory Gardner (R-Colo.).
Current law requires capital improvements be 85 percent shareholder financed. The Water and Agriculture Tax Reform Act multiplies the sources from which mutual ditch, irrigation and water companies can obtain capital to expand and improve their water systems.
Specifically, the bills allow mutual water storage and delivery companies to maintain their tax-exempt status – even if they receive more than 15 percent of their revenue from non-member sources — as long as the revenue is reinvested into maintenance, operations and infrastructure improvements.