What Farmers Need to Know about the Latest Relief Bills

Recent COVID-19 relief programs have impacts for farmers.

• The Treasury Department and Internal Revenue Service (IRS) announced that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The New Jersey Department of the Treasury has also extended income tax payments from April 15, 2021, to May 17, 2021. This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15. Source: Internal Revenue Service (irs.gov) and New Jersey Department of the Treasury (https://www.state.nj.us/treasury/taxation)
• The American Rescue Plan Act ($1.9 trillion) – March 11, 2021
  • Assistance for Socially Disadvantaged Farmers –
    • Requires USDA to make payments of 120% of outstanding loans as of January 1, 2021 to socially disadvantaged farmers.
    • $1.01 billion in outreach, training, education, technical assistance, grants and loans, and funding to educational institutions to help land access to socially disadvantaged farmers.
  • Nutrition assistance to millions through additional funding for nutrition assistance programs (SNAP, WIC, school lunch programs, senior nutrition, nutrition assistance for the territories).
  • Supporting farmers and strengthening the food supply chain.
    • Increases food available for distribution through food banks, nonprofits, or restaurants to help feed families in need and at the same time supports farmers by purchasing their products.
    • Provides grants and loans to reimburse or purchase personal protective equipment, test kits, and other measures to keep essential food workers safe.
    • Invests in infrastructure and retooling support for food processors, farmers markets, food banks, local food systems, and producers to build resiliency in the food supply for the long term.
    • Funds the monitoring of COVID-19 in animals and reduces overtime inspection fees paid by small meat and poultry processors, supporting livestock and animal health.
  • Strengthening infrastructure, housing, and health care in rural America.
    • $500 million in Community Facility Program funds to help rural hospitals and local communities broaden access to COVID-19 vaccines & food assistance.
    • $100 million through September 2022 in rental assistance for low-income and elderly borrowers.
    • $39 million through September 2023 to help refinance direct loans under the Single-Family Housing Loan Program and the Single-Family Housing Repair Loans & Grants.
    • Investments into rural communities by expanding internet connectivity and establishing a homeowner assistance fund to assist struggling homeowners with mortgage payments, property taxes, property insurance, utilities, and other housing related costs.
  • PPP Extension Act of 2021
    • Passed the House March 18, 2021. Still needs to go through Senate and to the President before it becomes law.
    • This bill extends by 60 days the Paycheck Protection Program, established to support small businesses in response to COVID-19 (i.e., coronavirus disease 2019), through June 30, 2021. Currently, the program is set to expire on March 31, 2021.
    • For the final 30 days of the program (i.e., from June 1 until June 30), the Small Business Administration may only process applications submitted prior to June 1, and it may not accept any new loan applications.
    • The revised formula, introduced in an interim final rule March 3, allows Schedule C filers to use gross income instead of net profit in calculating the maximum amount they can receive in a PPP loan. Because many Schedule C filers report little, if any, net profit, they can qualify for significantly larger PPP loans using gross income in the formula.
    • The formula change does not make the change retroactive and allow Schedule C filers who received PPP loans based on the old formula to apply for the difference between what they received and what they could have received using gross income instead of net profit.
    • If I file a 1040 using Schedule F, can I get a PPP loan?
    • Yes, if your farm or ranch meets the size standards set by the SBA:
    • Farmers who fill a Schedule F were eligible for a PPP loan if:
      • Their business meets SBA’s “alternative size standard.” The “alternative size standard” is currently: (1) maximum net worth of the business is not more than $15 million, and (2) the average net income after Federal income taxes (excluding any carry-over losses) of the business for the two full fiscal years before the date of the application is not more than $5 million. For all of these criteria, the applicant must include its affiliates in its calculations.

The PPP Extension Act of 2021 is not yet law but can be very beneficial for farmers.  My suggestion is to consult with your professional tax advisor, pay taxes that are due, but do not file until we see if the PPP Extension Act of 2021 becomes law.

The United States Small Business Administration (SBA https://www.sba.gov) has FAQs that are constantly being updated to explain these programs and can be very useful for you and your tax advisor.