Favorable Horse Provisions in Tax Extender Bill Passed by Congress

December 18, 2015

Congress has passed a tax extender bill called the Protecting Americans from Tax Hikes Act of 2015 that includes several provisions important to the horse industry and supported by the American Horse Council.  

At the end of 2014, a number of favorable tax provisions for horse owners, breeders and businesses expired. In all, over sixty tax provisions expired; some applied to all businesses, including the horse industry, and one was specifically applicable to owners of race horses. All of the provisions extended are retroactive for all of 2015.

Importantly, the bill would reinstate 3-year-depreciation for all race horses for two more years. From 2009 through 2014, race horses could be depreciated over three years, regardless of when they were placed in service. This change, which eliminated the 7-year depreciation period for race horses and made all race horses eligible for three-year depreciation, expired at the end of 2014. The just passed extender bill would reinstate 3-year-depreciation for race horses placed in service after December 31, 2014 through 2016.

The bill would also increase the so-called Section 179 business expense deduction back to $500,000 and make this provision permanent. It is currently set at $25,000. This would allow anyone in the horse business to immediately depreciate up to $500,000 of the cost of any investment in business assets, including horses, purchased and placed in service. The deduction would be reduced dollar-for-dollar once investment in all one’s business activities hit $2 million.

The bill would restore bonus depreciation for qualifying new property, including assets used in the horse business, such as horses and other equipment, purchased and placed in service during 2015 through 2019. The bonus depreciation percentage is 50 percent for property placed in service during 2015, 2016 and 2017 and phases down to 40 percent in 2018, and 30 percent in 2019. The first use of the horse or equipment must begin with the taxpayer.

The extender bill would also restore and make permanent favorable tax treatment for land donated for conservation purposes, particularly land donated by farmers and ranchers.

The AHC supported the tax extender bill and originally achieved the 3-year-depreciation of race horses provision in the 2008 Farm Bill and supported its inclusion in subsequent tax extension bills, including this one.

Congress Approves Omnibus Bill to Fund Government

Congress has passed an omnibus appropriations bill, which will fund the government through September 30, 2016. This bill is a package that includes all 12 of the FY 2016 appropriations bills, and will fund government agencies and programs until the end of the fiscal year, September 30, 2016.

The omnibus bill contains several provisions that impact the horse industry, including reforms to the H-2B temporary guest worker program, the U.S. Department Agriculture (USDA) FY 2016 appropriations bill, defunding of horse slaughter, and reauthorization of the Land and Water Conservation Fund (LWCF).

H-2B Temporary Worker Program

The bill includes several beneficial provisions relating to the H-2B temporary, non-agricultural worker program and would roll back some of the most onerous provisions of a 2015 H-2B rule. The AHC has been working to ensure these provisions were included in the omnibus bill. These provisions will make the H-2B program less burdensome for employers, including those in the horse industry to use. The bill will do the following:

  • Exempt H-2B returning workers from the 66,000 annual cap;
  • Require wages to be based on the job category and experience level required, rather than an artificially inflated median wage;
  • Clearly define seasonal as ten months, as opposed to the nine months in the 2015 H-2B rule;
  • Prevent the Department of Labor (DOL) from implementing the provisions of the 2015 H-2B rule related to corresponding employment and the ¾ guarantee of work days; and
  • Prevent DOL from implementing the new and burdensome DOL enforcement scheme in the 2015 H-2B rule related to audits and the Certifying Officer (CO) assisted recruitment. 

These provisions will make the H-2B program easier to use and were supported by the AHC.

FY 2015 USDA Appropriations

Animal and Plant Health Inspection Service and Equine Health

The bill appropriates $898 million for the Animal and Plant Health Inspection Service (APHIS). APHIS is the USDA agency responsible for protecting the U.S. equine industry and responding to contagious equine disease outbreaks.   Funding for Equine, Cervid, and Small Rumiant health is set at $19.5 million, the same as FY 2015.


Horse Slaughter

The bill includes language that prohibits USDA from using any funds to provide inspectors at meat processing facilities that slaughter horses, continuing a block that begin in 2005, except for a brief period in 2012 and 2013.

No horse slaughter facilities are operating in the U.S. and this bill would effectively prevent any such facility from opening until September 30, 2016.

The language was included in the omnibus bill because the Senate Appropriations Committee adopted an amendment that prohibited funding for inspectors at horse slaughter facilities when they debated and approved their respective version of the FY 2016 USDA appropriations bill. The Senate amendment was offered in committee by Senator Tom Udall (D-NM) and passed by a voice vote.

Horse Protection Act

The bill provides $697,000 for enforcement of the Horse Protection Act (HPA), the same as FY 2015. The HPA was enacted in 1970 to prevent the soring of horses, primarily Tennessee Walking Horses.

Because soring continues to be a problem in the “big lick” segment of the Walking Horse industry, the AHC has been working to pass the Prevent All Soring Tactics Act (PAST Act) (S.1121/ H.R.3268). The PAST act would strengthen the HPA and end this cruel practice. 

The Land and Water Conservation Fund

The bill will also reauthorize the Land and Water Conservation Fund (LWCF) for three years with funding of $450 million for the coming FY 2016, a nearly 50 percent increase over the previous level.

The program, which expired on October 1, 2015, provides funds and matching grants to federal, state and local governments for the acquisition of land and water for recreation and the protection of natural resources. The LWCF program benefits recreational riders by providing increased recreational opportunities. 

Wild Horses and Burros

The omnibus bill also includes a provision that would prohibit the Bureau of Land Management from euthanizing healthy wild horses in its care or from selling wild horses or burros that results in their being processed into commercial products.

The bill is expected to be signed by the President shortly.

Highway Bill Nears Final Passage, Recreational Trails Program Included

December 3, 2015 Today, the House of Representatives passed the final version of a multi-year national highway bill known as the Fixing America’s Surface Transportation Act, or the FAST Act. The Senate is expected to pass the bill Friday and the President has said he will sign it. The bill reauthorizes the Federal Highway Administration’s Recreational Trails Program (RTP) for the next five years and provides $85 million annually for the program. The bill has been working its way through Congress for most of this year. During the Congressional process several attempts were made to eliminate the RTP Program from the bill. These attempts were defeated because of strong support from Congressional champions of the program and grassroots support from recreational trail users, including many equestrians. Grassroots support played a very important role in making sure RTP was included in the final bill. The AHC appreciates all the individual horsemen and organizations that contacted their Members of Congress in support of RTP. Since its inception RTP has provided money for thousands of state and local trail projects across the country, including many that benefit equestrians. RTP provides funding directly to the states for recreational trails and trail-related facilities for all recreational trail users.   It is funded with a portion of the gas taxes paid into the Highway Trust Fund by recreational off-highway vehicle users. It is a victory for all recreational trail users that RTP was reauthorized and will be available to fund trail projects around the country for the next 5 years. If you have any questions, please contact the AHC.