USDA Revenue Loss Assistance Programs For Agricultural Producers

Feb 07, 2023

At the end of last year, the U.S. Department of Agriculture (USDA) announced its plan to launch the Emergency Relief Program (ERP) Phase Two, as well as the new Pandemic Assistance Revenue Program (PARP). These two disaster programs were developed to help offset crop and revenue losses for agricultural producers. Just last month, the USDA announced its Farm Service Agency (FSA) is now accepting applications for both of these programs through June 2, 2023. Below are some of the key details to know before applying. For a full listing of all the guidance and qualifications, visit the USDA’s website.

Emergency Relief Program (ERP) Phase Two

  • ERP Phase Two is for producers who didn’t receive assistance from ERP Phase One.
  • Eligibility for assistance through this program is based on revenue losses experienced from eligible natural disasters in 2020 and 2021.
  • Producers should begin reviewing the following documents in preparation for applying for ERP Phase Two:
    • Schedule F (Form 1040)
    • Profit or Loss from Farming (or similar tax documents for tax years 2018-2022, representing their applicable Benchmark Year and Tax Year for Disaster Year Revenue)

Pandemic Assistance Revenue Program (PARP)

  • PARP provides financial assistance for producers who suffered at least a 15% decrease in allowable gross revenue for the 2020 calendar year, as compared to 2018 or 2019.
  • Producers may be eligible for assistance through PARP for a range of agricultural commodities and allowable gross revenue sources.
  • Other notable eligibility requirements include:
    • Must be a citizen of the United States, a resident alien, a partnership or organization structure organized under state law, an Indian Tribe or Tribal organization, or an eligible foreign person or foreign entity
    • Have an average adjusted gross income (AGI) of less than $900,000 for tax years 2016, 2017, and 2018
    • Comply with provisions of the “Highly Erodible Land and Wetland Conservation” regulations, often called the conservation compliance provisions.
    • Submit a complete PARP application form (FSA-1122) and provide all required documentation.

Next Steps:

Applications for each program are due June 2, 2023. Producers can apply for both programs during the same appointment with USDA’s Farm Service Agency (FSA).

For more information, producers should contact their local USDA service center or reference the ERP Phase Two-PARP Comparison Fact Sheet.


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Jeffery Long, CPA
Partner

Categories: Agribusiness


Deadline Extended For ApprenticeOhio Training Grants Until The End Of March

Jan 17, 2023

In September of last year, Ohio Governor, Mike DeWine, announced training reimbursement grants being made available to ApprenticeOhio sponsors and employers as a result of a federal Building State Capacity to Expand Apprenticeship through Innovation grant that Ohio Department of Job and Family Services (ODJFS) received in 2020.

Sponsors and employers can apply for the grants at Apprentice.Ohio.gov, receiving reimbursement of up to $2,500 per apprentice for up to 10 apprentices to help cover the costs of training and tool allowances.

The applications for reimbursement of costs incurred since July 1, 2022, were originally due by Dec. 31, 2022, but the deadline has been extended until March 31, 2023. According to ODJFS Director, Matt Damschroder, “the program has received 100 applications so far and approved nearly half of them, paying out nearly $900,000.”

To learn more and to apply, visit https://apprentice.ohio.gov/

Categories: Construction & Real Estate, Manufacturing & Distribution, Tax Planning


Proposed Regulations Address Foreign Tax Credit Rules

Dec 27, 2022

The IRS has recently issued proposed regulations relating to the foreign tax credit covering:

  • Guidance on the reattribution asset rule for purposes of allocating and apportioning foreign taxes
  • The cost recovery requirement
  • The attribution rule for withholding tax on royalty payments

Reattribution Asset Rule

The 2022 foreign tax credit final regulations provide rules for allocating and apportioning foreign income tax arising from a disregarded payment. Foreign gross income included by reason of the receipt of a disregarded payment has no corresponding U.S. item because Federal income tax law does not give effect to the payment as a receipt of gross income. The new proposed rules therefore characterize the disregarded payment under Federal income tax law for purposes of assigning this foreign gross income to the statutory and residual groupings.

These rules treat the portion of a disregarded payment, if any, that causes U.S. gross income of the payor taxable unit to be reattributed as a “reattribution payment” under either the rules for gross income attributable to a foreign branch in the case of a taxpayer that is an individual or domestic corporation; or the rules for gross income attributable to a tested unit in the case of a taxpayer that is a foreign corporation. The excess of a disregarded payment over the portion that is a reattribution payment is treated either as a contribution from one taxable unit to another taxable unit owned by the first taxable unit, or as a remittance of a taxable unit’s current and accumulated earnings.

Cost Recovery Requirement

Under the cost recovery requirement, the base of a foreign tax permits the recovery of significant costs and expenses attributable, under reasonable principles, to the gross receipts included in the tax base. The proposed regulations provide additional guidance with respect to whether the test is met in certain cases where foreign tax law contains a disallowance or other limitation on the recovery of a particular cost or expense that may not reflect a specific principle underlying a particular disallowance in the Code. The proposed regulations also provide that the relevant foreign tax law need only permit recovery of substantially all significant cost or expense, based on the terms of the foreign law. A safe harbor is provided for applying the requirement.

Attribution Requirement for Royalty Payments

The attribution requirement allows a credit for foreign tax only if the country imposing the tax has a sufficient nexus to the taxpayer’s activities or investment in capital. Under the source-based attribution requirement, a foreign tax imposed on the nonresident’s income on the basis of source meets the attribution requirement only if the foreign tax sourcing rules are reasonably similar to the U.S. sourcing rules. With respect to royalties, foreign tax law must source royalties based on the place of use of, or the right to use, the intangible property, consistent with how the Code sources royalty income.

The proposed regulations provide an exception (the single-country exception) to the source-based attribution requirement if a taxpayer can substantiate that the payment on which the royalty withholding tax is imposed was made pursuant to an agreement that limits the right to use intangible property to the jurisdiction imposing the tested foreign tax. The exception applies only when the taxpayer has a written license agreement that meets certain requirements.

The proposed regulations also modify the separate levy rule to provide that a withholding tax that is imposed on a royalty payment made to a nonresident pursuant to a single-country license is treated as a separate levy from a withholding tax that is imposed on other royalty payments made to such nonresident and from any other withholding taxes imposed on other nonresidents.

William Vaughan Company will continue to monitor proposed changes on foreign reporting. For immediate questions or concerns, please contact our team of experienced tax professionals.

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Categories: Tax Compliance


Ohio Tax Update: State Offers Dollar-for-Dollar Tax Credit for Scholarship Fund Donations

Dec 14, 2022

Starting with the 2021 tax year, the state of Ohio began offering dollar-for-dollar tax credits to individuals who donate to an Ohio-certified scholarship granting organization, or SGO. Defined by the state, SGOs are organizations exempt from federal taxation under section 501(c)(3) of the Internal Revenue Code, that prioritize awarding academic scholarships for low-income students to attend primary and secondary schools (K-12), and that receive certification from the Office of the Ohio Attorney General.

Individuals that donate to an SGO can expect to receive a tax credit equal to 100 percent of their contribution (up to $750,) while married couples could receive up to a $1,500 credit. In addition to claiming the state tax credit, eligible charitable contributions can also be claimed on federal income tax returns if the taxpayer opts to itemize their deductions.

Currently, there are 25 certified SGOs in the state of Ohio, all of which are listed on the Ohio Attorney General’s website.

“This is a very easy credit for Ohio taxpayers to take advantage of,” says William Vaughan Company Tax Partner, Sandi Towns. “Those who have donated to Ohio-certified SGOs in 2022 need simply include their proof of donation letter(s) with other tax documents given to their accountants.”

Says Towns, “William Vaughan Company’s tax team will continue to monitor this and other tax credit updates, however I urge anyone wishing to take advantage of these credits to contact their accountant in order to determine which credits make the most sense for their specific tax and financial situation.”


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Sandi Towns, CPA/PFS, CFP®
Tax Partner
sandi.towns@wvco.com

Categories: Tax Planning


Inflation Reduction Act Expands 179D (Energy Efficient Commercial Buildings Deduction)

Oct 17, 2022

The Inflation Reduction Act of 2022 (2022 IRA) was passed to incentivize investment in clean energy and promote the reduction of carbon emissions. A large share of the incentives come in the form of tax credits, which in some cases are extensions or expansions of current credits, such as those for electric vehicles or residential energy upgrades.

Of the tax provisions introduced by the 2022 IRA, one of the most significant to businesses has been the expansion of the Energy Efficient Commercial Buildings Deduction (§179D), which increases the maximum deduction and updates the eligibility requirements for a property’s reduction of energy costs, in addition to other changes.

Under the expanded provision, a deduction is allowed for all or part of the cost of certain energy-savings improvements made to domestic, commercial buildings placed in service as part of the building’s:

  • interior lighting systems
  • heating, cooling, ventilation (HVAC), and hot water systems
  • building envelope

The tax deduction benefits both commercial building owners and lessees along with designers of government-owned buildings. Additionally, the provision states that installation of energy-efficient property may occur as a result of new construction, or through the improvement of an existing commercial or government building.

Efficiency standard: To qualify for the deduction, newly updated eligibility requirements call for energy-efficient property to reduce associated energy costs by 25% or more (decreased from 50% or more) in comparison to a reference building that meets the latest efficiency standards.

Applicable amount: The applicable dollar value of the deduction is $0.50 per square foot, an increase of $0.02 for each percentage point above 25% that a building’s total annual energy cost savings are increased. However the amount cannot be greater than $1/ square foot, and the maximum amount of the deduction in any tax year cannot exceed $1/ square foot minus the total deductions taken over the previous three years (or during a four-year period in cases where the deduction is allowable for someone other than the taxpayer). The applicable dollar value will be adjusted for inflation for tax years beginning after 2022.

An increased dollar value is available for projects that satisfy prevailing wage and apprenticeship requirements for the duration of the construction.

Alternative deduction for energy-efficient retrofit property. Under the 2022 Inflation Act, taxpayers may elect to take an alternative deduction for a qualified retrofit of any eligible property. However, instead of a reduction in total annual energy power costs, the deduction is based on the reduction of energy usage intensity.

For more information on how you may be able to take advantage of this deduction or any other tax relief provisions under the 2022 Inflation Act, contact William Vaughan Company’s team of trusted tax professionals.

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Categories: Tax Planning