December 17, 1975
Page 41244
ADDITIONAL COSPONSORS OF AMENDMENTS
AMENDMENT NO. 1075
At his own request, the Senator from Maine (Mr. MUSKIE) was added as a cosponsor of amendment No. 1075, intended to be proposed to the bill (H.R. 7727) suspending duties on certain yarns of silk.
Mr. MUSKIE. Mr. President, I join today in cosponsoring an amendment to the Internal Revenue Code to deal with the special problems of Maine fishermen. The statutory changes which this amendment achieves would solve two problems which have troubled Maine fishermen in recent months. Both of the problems result from administrative rulings by Federal officials in the Internal Revenue Service and the Postal Service, but efforts short of legislative action have failed to relieve the problem. Both of these problems were addressed by legislation which I introduced earlier this year with Senator HATHAWAY and I am delighted that the Finance Committee has indicated a willingness to accept the amendment.
This amendment would have a direct impact on the efforts of Fisheries Communications, a Maine organization, which publishes the Maine commercial fisheries newspaper in an effort to make available free to the fishing industry in Maine, educational materials and information relevant to the harvesting, processing and marketing of our marine resources. Tax exempt status under 501(c) (5) is important to this organization to permit the use of favorable postal rates for the distribution of their paper.
A statement of the problem and the relief which this amendment would provide is well stated in a statement on the subject by Fisheries Communications, which publishes the Maine commercial printed in the RECORD at the conclusion of my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
[See exhibit 1.]
Mr. MUSKIE This amendment also addresses the problem of fishermen troubled by recent IRS rulings which have disrupted the traditional working arrangements in that industry. The amendment restores the status of non-remuneration paid to certain workers on fishing boats as self-employment income for purposes of the Federal Insurance Contributions Act and for purposes of Federal income tax withholding requirements.
This amendment is designed to permit the continuation of a traditional working arrangement in the lobster fishing industry which is threatened by recent IRS rulings. Maine lobstermen informally cooperate from time to time with others to overcome hardships resulting from bad weather or other unusual work demands. For example, a lobster boat captain might ask a colleague or clam digger to join him in his rounds and assist him in handling traps during inclement weather. The locus of the duties performed handling traps and gear in the rear of the boat accounts for the designation of these individuals as "sternmen." According to the traditional, informal agreements, the sternmen receive a share of the lobster catch for the day in return for their assistance.
The boat owner makes no guarantee as to how much the sternman will earn. In the case of an unsuccessful trip, the sternman might not receive anything.
There is generally little formality or continuity to these arrangements. There are no written contracts and the sternman usually works with a boat owner for only brief periods. He may own his own boat and join another captain while his own vessel is under repair or he may be a clam digger working on fishing boats while flats are closed or inaccessible.
Until recent IRS rulings altered the practice, both the boat owner and the sternman considered themselves as self-employed and reported their income from the fishing venture on their own return with no withholding required. These arrangements were convenient and logical since each was otherwise filing a return as a self-employed person and because of the occasional nature of the sternman's work. Maine fishermen have always filed returns in the manner which was accepted by the Internal Revenue Service until they began to demand that taxes be withheld.
The situation changed dramatically for Maine fishermen with the application of this Revenue ruling and the beginning of a massive IRS audit of lobstermen under the "Lobster Project." In some cases, boat owners were required to pay withholding taxes retrospectively despite payment of taxes on the same wages as self-employment income by the sternmen. The apparent inequities involved have offended all familiar with the audits and have discouraged cooperation between lobstermen and IRS.
The frustration and expense related to keeping records and withholding taxes for sternmen has discouraged use of these cooperative arrangements and threatens to adversely affect lobstering efforts in areas of rough seas for the individuals and communities involved, an unacceptable cost for the minimal convenience afforded the IRS under this ruling, and I am cosponsoring this amendment to correct the situation by treating sternmen as self-employed under the Federal Insurance Contribution Act and withholding provisions of the Federal Income Tax.
[EXHIBIT 1]
STATEMENT OF FISHERIES COMMUNICATIONS IN CONNECTION WITH PROPOSED I.R.C. SECTION 501(g)
Fisheries Communications, a nonprofit corporation organized under the laws of the State of Maine on July 20, 1973, proposes a new Internal Revenue Code section 501(g) . A draft of such an amendment is attached. An explanation of the amendment follows.
REASON FOR AMENDMENT
Fisheries Communications publishes the Maine Commercial Fisheries, a publication sent free to all licensed sea food dealers and fishermen in the State of Maine. Its purpose is to provide a free source of educational materials and information to all segments of the fishing industry in Maine.
The Internal Revenue Service has ruled that Fisheries Communications does not qualify as an "agricultural" organization and is not exempt under I.R.C. section 501(c) (5) solely on the ground that the fishing industry is not an agricultural industry. (Were it not for this questionable interpretation of the meaning of "agricultural," it is clear that Fisheries would qualify under I.R.C. section 501(c) (5) .) This private ruling was subsequently reiterated in a public ruling (Rev. Rul. 74488, 197441 I.R.B. 9). Copies of both rulings are attached.
PURPOSE OF AMENDMENT
The proposed amendment would make it clear that the term "agricultural" in I.R.C. section 501(c) (5) includes the harvesting of aquatic resources.
Such definition should be viewed as merely declaring modern realities — a position by Congress in substitution of the unduly restrictive meaning given the term by the I.R.S. That is, both land and marine activities are concerned with the harvesting of food resources and it is unrealistic not to view fishing in the 1970's as an "agricultural" endeavor.
Congress has enacted comparable legislation in recent years. Congress has recognized that the fish resources of the nation make a material contribution to our national economy and food supply. 16 U.S.C. § 742a. Congress has also recognized that agriculture includes the harvesting of sea resources. 16 U.S.C. § 1085. Provisions of the federal agriculture statutes include fishing within their purview. E.g., '7 U.S.C. § § 991, 1732.
The case law and I.R.S. rulings indicate that the term "agriculture" is to be liberally construed. Campbell v. Big Spring Cowboy Reunion, 310 F. 2d 143 (5th Cir. 1954). The term is extremely broad and broader than the term "farming". Florida Industrial Commission v. Growers' Equipment Co., 12 So. 2d 887 (S. Ct. Fla. 1943). The term "agricultural" has been ruled by the I.R.S. to include organizations that raise fur bearing animals and market pelts (Rev. Rul. 56245, 19561C.B. 204), test soil for farmers and non-farmers (Rev. Rul. 54282, 19542 C.B. 126), and are composed of women married to farmers (Rev. Rul. '74118, 197411 I.R.B. 11).
There is no federal tax policy to be advanced by narrowly interpreting the term "agricultural" to exclude the harvesting of marine resources when it clearly encompasses the harvesting of land resources. As one federal court has stated, "agriculture" is defined in a broad sense as "the science or art of the production of plants and animals useful to man". Sancho v. Bowie, 93 F. 2d 323, 324 (1st Cir. 1937). The raising and trapping of muskrats constitutes an agricultural pursuit for state tax purposes. Bonham & Young Co. v. Martin, 11 A. 2d 371 (N.J. St. Bd. Tax App. 1940) . Consequently, the term "agricultural" warrants a comparably meaningful statutory definition, in view of the I.R.S.' restrictive policies.
Today's facets of ocean harvesting were unknown in 1909 (when I.R.C. section 501 (c) (5) originated) but have subsequently been determined by Congress in other contexts to be agricultural. The time has come for this general recognition of the contemporary meaning of the term "agricultural" (as reflected in the proposed amendment) to be reflected in the Internal Revenue Code.