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February 26,2021

The Honorable Janet Yellen Secretary of the Treasury 1500 Pennsylvania Avenue, NW Washington,DC 20220

Dear Secretary Yellen,

Congratulations on your nomination and confirmation as Treasury Secretary. We look forward to working with you to address the impacts of the COVID-l9 pandemic on the nation's economy and other important matters. We write today to bring to your attention a time-sensitive issue that significantly affects the nation's farmers and farming communities, specifically, the issuance of final regulations under Internal Revenue Code section 199A(g) (relating to farmer cooperatives and their patrons). We request that Treasury provide immediate relief by withdrawing the regulation or delaying its effective date.

On February 14,2020, we wrote Secretary Mnuchin expressing concern that then-proposed regulations did not reflect the carefully constructed modifications to section 1994 in 2018 to address a drafting error in the Tax Cuts and Jobs Act of 2017 (TCJA). The intent of the 2018 amendments was to replicate as closely as possible former section 199 for farmer cooperatives and their farmer-patrons, while addressing a potential market imbalance presented by the TCJA.

Several Members of Congress raised this issue with Secretary Mnuchin when he appeared before the Ways and Means Committee on March 3,2020. At that time, he indicated that he would consult with Members of the Committee before moving forward with final regulations. While Treasury held limited consultations with members and stakeholders over the next year, we remain concerned the final regulations published on January 19, 2021, appear substantially similar to the proposed regulations which initially caused our concerns.

We have several issues with these final regulations. The final regulations do not reflect the statutpry construction of section 199A(g), the legislative history, the regulatory authority provided to Treasury with respect to this provision, and relevant case law. They reflect a misunderstanding of the operations of a farmer cqgperative and its relationship with its farmer-patrons. Most importantly, the final regulations impose unwarranted financial burdens on farmers at a time when farm communities are struggling.

We would like to discuss this matter with you further. In the meantime, we request that Treasury withdraw or delay the effective date of the regulation in order to give you and your staff time to review this important issue.

Thank you for your consideration of this matter. We look forward to working with you.

Sincerely, WWr Member of Congress

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