Legislation to Eliminate Soring Introduced in the House

On March 30, 2017, Representatives Ted Yoho (R-FL) and Kurt Schrader (D-OR) re- introduced the Prevent All Soring Tactics Act of 2015 (HR 1847) (PAST Act) in the House of Representatives.   The bill is intended to strengthen the Horse Protection Act (HPA) and prevent the soring of Tennessee Walking Horses, Racking Horses, and Spotted Saddle Horses.  The bill is identical to the bill introduced last Congress and is supported by the American Horse Council and most national horse show organizations.

Soring is an abusive practice used by some to train Tennessee Walking Horses, Spotted Saddle Horses, and Racking Horses. It usually involves the use of action devices, chemicals, pads, wedges or other practices to cause pain in the horse’s forelegs and produce an accentuated show gait for competition.  Despite the existence of a federal ban on soring for over forty years, this cruel practice continues in some segments of the walking horse industry.

The PAST act would amend the HPA to prohibit a Tennessee Walking Horse, a Racking Horse, or a Spotted Saddle Horse from being shown, exhibited, or auctioned with an “action device,” or “a weighted shoe, pad, wedge, hoof band or other device or material” if it is constructed to artificially alter the gait of the horse and is not strictly protective or therapeutic.  These new prohibitions would not apply to other breeds that do not have a history of soring.

The legislation would also increase fines and penalties for violations, including the potential for a lifetime ban for repeat offenders. 

The bill would create a new licensing process for horse show inspectors, eliminating the current often criticized designated qualified persons (DQPs) program. The bill would require the U.S. Department of Agriculture to train, license and appoint new independent inspectors for shows and other HPA-regulated activities that wish to hire an inspector.  Licensed or accredited veterinarians would be given preference for these positions.  The decision to hire and cost of an inspector would still reside with the management of a show, sale or auction. 

 

 

Many national horse show organizations have endorsed the PAST Act including;

  • The American Horse Council
  • The American Quarter Horse Association
  • The American Association of Equine Practitioners
  • The American Paint Horse Association
  • The U.S. Equestrian Federation
  • The American Morgan Horse Association
  • The Pinto Horse Association of America
  • The Arabian Horse Association
  • The American Saddlebred Horse Association
  • The United Professional Horsemen’s Association
  • The Appaloosa Horse Club

Many state and local horse organizations also support the bill. The bill has broad bipartisan support and already has over 208 co-sponsors. 

Various efforts have been made since enactment of the HPA forty years ago to stop the soring of horses and they have not worked.  This bill is focused on the problem it is intended to solve and does not adversely affect other segments of the show industry that are not soring horses and have no history of soring horses.    

The AHC supports the bill and urges all members of the horse industry to contact their Representative and ask them to support the bill and become a co-sponsor. 

Equine Tax Bills Introduced

On March 30, 2017 Congressman Andy Barr (R-KY) re-introduced the Race Horse Cost Recovery Act (H.R. 1804) and the Equine Tax Parity Act (H.R. 1805). The Race Horse Cost Recovery Act would permanently place all race horses in the three-year category for tax depreciation purposes. A 2008 provision that temporarily put race horses in the three year category expired at the end of 2016. The Equine Tax Parity Act would make horses eligible for capital gains treatment after 12 months, rather than 24, similar to other business assets. The American Horse Council supports both of these bills.

Congressman Barr also introduced the Race Horse Expensing Certainty Act (H.R. 1806), the bill would provide extra clarity that racehorses are eligible for the Section 179 business expense deduction. All horses purchased and placed in service by a business are currently eligible for the Section 179 deduction and the bill would not change this.

Race Horse Cost Recovery Act

The 2008 Farm Bill included language that allowed all race horses to be depreciated over three years, regardless of their age when placed in service. Prior to then, race horses were depreciated over seven years if placed in service before they turned two. Horses placed in service after two (24 months from foaling date), could be depreciated over three years. A horse is generally deemed to be placed in service when it begins training, which is usually at the end of its yearling year. This change to the tax code was extended several times, but expired at the end of 2016.   The Race Horse Cost Recovery Act would permanently make all race horses eligible for three year depreciation.

Depreciation is a means of recovering the cost of property, including horses, used in a business through deductions of portions of the horse’s cost over a period of years. Generally, the recovery period approximates the estimated useful life or economic life of the property. The horse industry believes a three year deprecation schedule more accurately reflects the actual time a horse will be raced and a seven year deprecation period unfairly penalizes the horse industry.

Permanently placing all race horses in the three year depreciation category would be of great benefit to the horse industry and is supported by the AHC.

Equine Tax Parity Act

The Equine Tax Parity Act (H.R. 3672) would make horses eligible for capital gains treatment after 12 months, rather than 24, similar to other business assets.

Under the current federal tax code, gains from sales by individuals of property used in a trade or business, including horses, qualify for long-term capital gains and are subject to the maximum capital gains tax rate of 15% for taxpayers earning less than $450,000 or 20% for those earning more. Since the individual income tax rate can go as high as 39.6%, the lower rate is a real advantage.

Horses held for breeding, racing, showing or draft purposes qualify for the capital gains rates only if they are held for 24 months. All other business assets (except cattle) qualify if held for 12 months.

The Equine Tax Parity Act would end this discriminatory treatment of horses under the tax code and allow horse owners to enjoy the reduced rate upon sale after holding a horse for 12 months. For most owners and breeders shortening the capital gains holding period to 12 months should be a benefit. Reducing the holding period by half would give many horse owners and breeders more flexibility to sell and market their horses. It would mean that every sale of a horse which is held for at least 12 months will qualify as a capital gain or loss unless that horse is held primarily for sale. The AHC supports this bill.

The Race Horse Expensing Certainty Act

The Section 179 business expense deduction allows any business, including any horse business, to immediately depreciate up to $500,000 of the cost of any investment in business assets, including horses. The deduction is reduced dollar-for-dollar once investment in all one’s business activities hit $2 million. The bill would provide extra clarity that racehorses are eligible for the Section 179 business expense deduction.

AHC Comments on IRS Proposed Changes to Pari-Mutuel Wagering Regulations

Today, the AHC submitted comments in support of an Internal Revenue Service (IRS) proposed rule regarding withholding requirements on pari-mutuel winnings. The proposed rule would make changes to withholding requirements that more accurately reflect the current state of wagering in the horse racing industry. The rule, if made final, will be of great benefit to horse players and the racing industry.

Specifically, the proposed rule would define “amount of the wager” as the total amount wagered by a bettor into a specific pari-mutuel pool on a single ticket for purposes of determining whether wagering proceeds are subject to 25% withholding on winnings of $5,000 or more and are at least 300 times as large as the amount wagered.

Currently, the IRS does not recognize the total amount wagered on an exotic bet with “boxes,” “wheels,” and “keys,” when determining whether the 300:1 ratio has been met and 25% withholding is triggered, only the cost of the individual winning bet. This greatly increases the number of winning bets that are subject to withholding and does not accurately reflect the actual amount bet and the actual amount won. An example of how the current withholding requirements work and how they would work under the proposed rule can be found here: Example under Current IRS Regulations

In its comments, the AHC stated the current rules were written before “exotic bets” existed and do not accurately take into account the total amount wagered in many instances and the proposed changes will fix this issue. The AHC expressed its strong support for the proposed regulations and urged the IRS to finalize the rule as soon as is practical.

The AHC has requested the IRS make the proposed change for many years. The proposed rule can be viewed here: https://www.federalregister.gov/documents/2016/12/30/2016-31579/withholding-on-payments-of-certain-gambling-winnings

 If you have any questions please contact the AHC.

Executive Actions on Immigration and the Horse Industry

Recently, President Trump issued several executive orders relating to increased immigration enforcement and border security. These actions will impact many employers, including those in the racing and showing segments of the horse industry, even those that rely on legal foreign workers.    

For many years horse farms, horse shows, trainers and others have had difficulty recruiting American workers. This has forced many to rely on foreign workers and utilize both the H-2B non-agricultural and H-2A agricultural temporary foreign worker programs to meet their labor needs even though these programs are often extremely burdensome to use.  Additionally, many of the workers employed in the industry may lack legal status.

Most foreign workers in the industry are directly responsible for the care of the horses upon which the entire horse industry is dependent. Without these workers to raise, train, and care for the industry’s horses, many other jobs held by Americans not only in the horse industry, but also supported by the horse industry will be in jeopardy.

Generally speaking, increased enforcement, increased competition for legal workers and greater demand for H-2B and H-2A workers will make it more difficult for horse industry employers to fill many positions.

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President Trump’s new executive actions call for a wall along the southern border, increased detention and expedited removal of undocumented immigrants, and will enlist the local law enforcement in these efforts. There are still many questions regarding the magnitude of the impact President Trump’s actions will have.  However, it is likely there will be an increase of audits and raids to identify and deport undocumented immigrants. It is also possible many workers will leave the country on their own and fewer will come due to increased enforcement.

Many employers in industries like agriculture and the horse industry who have a large percentage of foreign workers will face increasing pressure to find legal workers and stiff competition for workers that are available. Already, the cap for H-2B visas for the first half of the fiscal year was reached on January 10th.  There is a statutory cap on the total number of to H-2B visas issued each year. Currently, Congress has set the H-2B cap at 66,000 per fiscal year, with 33,000 for workers who begin employment in the first half of the fiscal year (October 1 – March 31) and 33,000 for workers who begin employment in the second half of the fiscal year (April 1 – September 30).

Because the cap has already been reached, for many employers that means no H-2B workers will be available if they are needed in 2017. There is no cap on the H-2A agricultural visa program, but those workers can only be employed by horse breeding farms and cannot be utilized by trainers at race tracks or horse shows.

Simply put these executive orders, and existing problems with the H-2B program will make find workers for many positions in the horse industry much more difficult.     

What should members of the horse industry do?

First, horse industry employers should be prepared for increased worksite enforcement and make certain all required paper work is in order. This means that employers should make sure all Form I-9s are complete and accurate.

Second, the most immediate need for the horse industry is H-2B cap relief and restoring the returning worker exemption.  If you, your business or members of your organization rely on H-2B workers, please contact your Senators and Representative and let them know that it is vital Congress reinstate the H-2B returning worker exemption.

  • Call your Senators and Representative today.  If you do not know their direct numbers, you can reach them through the Capitol Switchboard at (202) 225-3121.  Once connected to the office, ask to speak to the person who handles H-2B issues and tell him or her how important the H-2B program is to you. Ask them to work with their party leadership to restore the H-2B returning worker exemption at the earliest opportunity.
  • Tell them horse farms, trainers, horseshows, and others in the horse industry are often unable able to find Americans who are willing and able to take jobs as grooms, and stable attendants.   
  • And despite substantial efforts to recruit American workers the industry has been forced to rely on foreign workers and the H-2B temporary worker program to meet their labor needs.
  • The cap for H-2B visas for the first half of the fiscal year was reached on January 10th. For many employers that means no H-2B workers will be available if they are needed in 2017.

Or email them here: app.muster.com/take-action/1KBtiFGTnz/

There continues to be many questions regarding the impact of these executive actions and the possibility of more executive actions and immigration legislation. The AHC will continue to monitor this issue.   Additionally, The AHC has worked for many years with a broad coalition of users to make both the H-2B and H-2A programs less burdensome and to ensure the programs are available to the horse industry. The AHC will continue this work and look for new opportunities to address the immigrant labor problem facing the industry.

Horse Protection Act Bill Opposed by AHC Reintroduced

Representative Scott DesJarlais (R-TN) has reintroduced the Horse Protection Amendments Act (H.R. 1338). This is the exact same bill DesJarlais introduced last year to amend the Horse Protection Act (HPA).   The bill would create a single Horse Industry Organization (HIO) that would be responsible for enforcement of the HPA. This bill is opposed by the AHC.

The HPA was enacted in 1970 and prohibits the showing, sale, or transport of a horse that has been sored. Soring is an abusive practice used by some horse trainers in the Tennessee Walking Horse, Spotted Saddle Horse, and Racking Horse industry to intentionally cause pain in a horse’s forelegs and produce an accentuated show gait for competition.

The AHC opposes the DesJarlais bill because it would not reduce the prevalence of soring in the Tennessee Walking Horse, Spotted Saddle Horse, and Racking Horse industry and does not address most of the issues raised in a USDA Office of Inspector General Report on the HPA enforcement program.  In fact it could exacerbate the situation by placing responsibility for enforcement of the HPA more firmly in the hands of a walking horse-controlled HIO. 

Details of the Horse Protection Amendments Act and AHC concerns about the bill can be found here.

The bill has 9 co-sponsors; Chuck Fleischmann (R-TN), John Duncan (R-TN), Marsh Blackburn (R-TN), Hal Rogers (R-KY), Diane Black (R-TN), Andy Barr (R-KY), David Roe(R-TN), James Comer (R-KY) and Bret Guthrie (R-KY).

The AHC continues to support the Prevent All Soring Tactics Act (PAST Act) that would strengthen the HPA and prevent the soring of Tennessee Walking Horses, Spotted Saddle Horses, and Racking Horses.

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