The ongoing survival and success of our country’s agricultural-based businesses is now more important than ever. In an effort to target relief programs to our nation’s farmers and ranchers, several provisions specific to them were included in the Consolidated Appropriations Act of 2021 (the CAA of 2021) which was signed into law on December 27, 2020, as a further legislative response to the coronavirus (COVID-19) pandemic.
Some of the major highlights specifically related to farmers and ranchers are summarized below.
· Second Round PPP Loans. This loan program has been extended until March 31, 2021. Farmers, ranchers, and other agricultural-based businesses may apply if they will use the full amount of funds from the first round of PPP loans and can show that they experienced a 25% reduction in gross revenue in any quarter in 2020 vs. the same quarter in 2019.
· Self-Employed Farmers Get a “Do-Over” PPP Calculation. The CAA of 2021 adds a new retroactive provision which allows self-employed farmers and ranchers to apply for more PPP loan money if they show gross revenue greater than $100,000 on their 2019 Schedule F. Originally, this calculation was based on net self-employment earnings and wages paid.
· Employer Retention Credit (ERC) The credit amount is increased to 70% for the first two quarters of 2021 with qualifying wages being limited to $10,000 per employee per quarter. These limits result in a calculated maximum credit per employee of $14,000 for the first two quarters of 2021 ($10,000 x 70% x 2 quarters). This maximum credit is increased from the 2020 maximum annual limit of $5,000 per employee. Also, the minimum reduction in revenue when compared to the same 2019 quarter to qualify for the credit is now lowered to 20% from 50%.
· Farmers’ Net Operating Losses. The COVID-related Tax Relief Act of 2020 (the COVIDTRA) allows farmers who had in place a two-year net operating loss carryback before the CARES Act to elect to retain that two-year carryback rather than claim the five-year carryback provided in the CARES Act. It also allows farmers who before the CARES Act waived the carryback of a net operating loss, to revoke the waiver.
TRP Sumner is proud to support our farmers, ranchers, and agricultural businesses, and we are humbled that they allow us to play a part toward insuring that their “farm to fork” activities continue to survive and be successful. The relief program provisions and guidelines customized for these agri-based taxpayers are extremely detailed. We are well versed and ready to help! Please call any of our offices located in Dunn and Fayetteville, NC for additional information. It is our goal to exceed our clients’ expectations everyday and to help you beyond the tax return. Be Well!