More Inflation Reduction Act of 2022 Analysis

  • Agribusiness
  • 8/11/2022

The Inflation Reduction Act of 2022 has repealed a provision in the Amercan Rescue Plan of 2021 that was designed to help socially disadvantaged farmers. However, t...

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.

This blog contains general information and does not constitute the rendering of legal, accounting, investment, tax, or other professional services. Consult with your advisors regarding the applicability of this content to your specific circumstances.

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