Full Text of Ag Groups’ Letter on PPP Rule Changes for Farming Partnerships


Jane Smith, John’s sister, is a farmer who operates as a sole proprietor, reporting her farm income on Form 1040, Schedule F. She has no employees. Jane’s 2019 gross income on Line 9 of Schedule F was $300,000, and her net income was $15,000. Under Section 313, Jane is eligible for a PPP loan of $20,833 — gross income of $300,000, limited to $100,000, prorated to 2.5 months.

Total PPP eligibility: $41,666

SCENARIO 2: Brother and Sister Farmers Operating in a Farm partnership

Instead of operating as sole proprietors, farmers John and Jane Smith formed Smith Family Farms, a general partnership, sharing in profits equally. Smith Family Farms’ 2019 gross income is $500,000, and the partnership reports a net operating loss of $35,000 (the same gross income and net operating loss as in Scenario 1). The partnership has no employees.

Smith Family Farms is not eligible for a PPP loan. It has no employees, and its net income is a loss, making its maximum loan amount $0.

Total PPP eligibility: $0

In passing Section 313, Congress intended to provide critical PPP assistance to farmers who are not paid wages and who have net operating losses. Unfortunately, as illustrated by these two scenarios, SBA’s interpretation of this provision has significantly limited the relief that Congress intended to afford. Many American farm and ranch families have structured their operations as partnership and LLCs. These families are currently excluded from receiving assistance through the PPP as intended by Congress.

We ask that you clarify to SBA that Congress intended to include farm partnerships and LLCs in Section 313. This clarification could be included legislative language amending Section 313 or could be included in the committee reports accompanying the next stimulus bill. Further, given that Congress will likely not pass the next stimulus bill until March, we ask that you consider extending the current March 31 enrollment deadline to allow eligible farmer and rancher partnerships and LLCs time to enroll in this program.

We thank you for your attention to this matter and for your on-going efforts to assist America’s farmers and ranchers during these trying economic times. Please do not hesitate to reach out to any of the undersigned organizations should we be able to provide additional details.

Sincerely,

Agricultural Retailers Association

Almond Alliance of California

American Farm Bureau Federation

American Feed Industry Association

AmericanHort

American Mushroom Institute

American Pistachio Growers

American Sheep Industry Association

American Soybean Association

American Sugar Alliance

California Walnut Commission

CoBank

Crop Insurance Professionals Association

Farm Credit Council

First Farmers Bank & Trust

KCoe Isom, LLP

Land O’Lakes, Inc.

Livestock Marketing Association

National Association of Wheat Growers

National Cattlemen’s Beef Association

National Corn Growers Association

National Cotton Council

National Council of Agricultural Employers

National Council of Farmer Cooperatives

National Milk Producers Federation

National Pork Producers Council

National Sorghum Producers

Panhandle Peanut Growers Association

Southwest Council of Agribusiness

United Fresh Produce Association

U.S. Apple Association

United States Peanut Federation

USA Rice

Western Growers

Western Peanut Growers Association

**

You can view a PDF version of the letter here: https://dt176nijwh14e.cloudfront.net/….

Katie Dehlinger can be reached at katie.dehlinger@dtn.com

Or you can follow her on Twitter @KatieD_DTN



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