WASHINGTON - U.S. Senators Sam Brownback (R-KS) and Byron Dorgan (D-ND) yesterday introduced the Conservation Reserve Program Tax Fairness Act, a bill that would abolish federal self-employment taxation of rental payments of farmers and ranchers who enroll parts of their land in the Conservation Reserve Program.

"The Internal Revenue Service's proposal to tax these rental payments as self-employment income is mistaken and clearly not in line with Congress' intent with respect to the Conservation Reserve Program," said Brownback. "We've fought the IRS before on this issue, yet the IRS continues to push for this unfair tax. My colleagues and I will work diligently to pass legislation to correct the IRS and protect farmers and ranchers from more taxation."

The IRS has proposed requiring active and retired farmers to pay self-employment taxes on CRP payments that could be retroactively applied to previous tax years.

Earlier this year, Brownback and Dorgan led a bipartisan group of senators in sending a letter to Treasury Secretary Hank Paulson and IRS Commissioner Mark Everson, asking them to reverse their ruling. Their response letter indicated they had no intention of doing so unless Congress passed a law clarifying CRP payments as rental payments.

The CRP is the USDA's single largest environmental improvement program. CRP encourages farmers to cover highly erodible cropland or other environmentally sensitive acreage with vegetative cover like native grasses, wildlife plantings, or trees. For taking this land out of production and allowing it to lie idle, the government pays the landowners a yearly rent per acre.

Kansans receive $102 million in payments annually for nearly 2.7 million cropland acres retired in the CRP. This year's rental payments in Kansas will average $4,386 per farm. A typical Kansas farmer with 160 acres of CRP would owe nearly $750 in new self-employment taxes because of the agency's position.

Senator Brownback is a member of the Senate Judiciary and Appropriations Committees.