More Inflation Reduction Act of 2022 Analysis
This post will do a little deeper dive into the Inflation Reduction Act of 2022 (IRA) that will likely become law this week. This post deals with the changes related to American Rescue Plan Act of 2021 provision to provide assistance to socially disadvantaged farmers.
Eliminate Loan Forgiveness for Socially Disadvantaged Farmers
The American Rescue Plan passed in 2021 had a provision to provide loan forgiveness for socially disadvantaged farmers plus an extra 20% to help pay for income taxes. This provision was immediately tied up in the courts and it appears that no funds were ever provided to these farmers. There has been rumors that some farmers received these loans, however, IRA completely repeals this program entirely.
Funds Available for At-Risk Farmers
IRA provides $3.1 billion to help at-risk farmers who are facing financial hardships. This applies to farmers who have direct loans with USDA or loans that are guaranteed by USDA. Is this perhaps a end around to give relief to certain socially disadvantaged farmers without calling it that. The Act gives broad authority to USDA to come up with the program.
Similar to forgiveness of PPP loans, this loan forgiveness will also be tax-free and all of the expenses associated with the forgiveness will be allowed as a deduction.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
It would be much more helpful if producers were told who will qualify. It was first socially disadvantaged (people of color), then in build back better, it was $150K for those in property areas (based on index), now, it’s anyone’s guess. And what happens to those that were mailed letters regarding foreclosures, does the moratorium still stand? So many questions!