Yes, You Really Can’t Defer Your ERP Payment
We have done a post on this already but continue to get some emails and feedback asking why a farmer can’t defer Phase 1 payments of the Emergency Relief Program (ERP) to 2023. These types of payments are similar to crop insurance and yes, they can normally be deferred one year but let’s review the three key requirements to defer crop insurance proceeds:
- Farmer is on the cash method of accounting (almost all are),
- Farmer normally reports more than 50% of total sales in the year after harvest (most do), and
- The farmer can only defer to the year after the damage was incurred.
The last item is what blows up any ability to defer Phase 1 payments. These payments are for damage that occurred in 2020 and 2021. 2022 is the latest you could defer 2021 payments and since you collected them this year, you are stuck with reporting these payments in 2022.
Perhaps some Phase 2 payments might be deferrable assuming it was for 2022 damage but at the speed that FSA is proceeding, that appears to be very slim.
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.
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