Our country’s farmer co-ops and their member-owners stand ready to help their fellow Americans weather the unprecedented crisis we currently face. Our members are committed to doing everything in their power to ensure the continued availability of the abundant, nutritious foods that can help keep the country healthy. All of our thoughts are also with the thousands who have been impacted by both the pandemic and the resulting disruptions to businesses and employees across the country. As we face a rapidly evolving landscape in the coming days, NCFC is using this page as our hub for updates on aspects of the crisis impacting agriculture and the work the organization is doing on behalf of co-ops and their owners.

Click Here for a List of Essential Worker Guidance Web Resources

Occupational Safety and Health Administration (OSHA) COVID-19 Guidance 

New State Regulations on Farm Worker Safety/Worker Housing

Oregon
Washington
Wisconsin 

UPDATED – February 24, 2021

Statement from NCFC President Chuck Conner the COVID-19 Relief Package

February 24, 2021 – “The National Council of Farmer Cooperatives supports Congress’s efforts to craft a legislative package to address the ongoing economic impacts of the COVID-19 pandemic. While the vaccine roll-out across the country points towards the light at the end of the tunnel, the economic disruption and displacement caused by the pandemic remains widespread. In particular, the agriculture and nutrition assistance contained in the package provides needed aid to farmers, rural communities and families facing food insecurity.”

View the full news release at:http://ncfc.org/press-release/statement-ncfc-president-chuck-conner-covid-19-relief-package/

Letter to Small Business Committees on PPP Eligibility for Producers

February 18, 2021 – NCFC joined on a letter sent to the Senate Committee on Small Business and Entrepreneurship and the House Committee on Small Business asking for assistance to ensure that all farm and ranch families are able to participate in the Paycheck Protection Program (PPP) on an equal footing.

A copy of the letter is available at: http://ncfc.org/letter/letter-committee-small-business-ppp-eligibility-producers/

PPP Update

December 14, 2020 – Negotiations are ongoing on Capitol Hill regarding an end-of-year Covid relief package.  If an agreement is reached, it is very likely that it will include a provision allowing deductibility of expenses funded with Paycheck Protection Program loans.  The provision has strong support among members of the taxwriting committees and NCFC recently joined over 600 industry groups and businesses on a letter to Congress urging passage.

The Small Business Administration recently updated its FAQ document, adding question number 53 (see page 19).  The new question address why some PPP borrowers will receive loan necessity questionnaires.  The FAQ outlines information that appears in the questionnaire:

• SBA is reviewing all loans of $2 million or more.
• The questionnaire is due ten business days after receipt.
• A request to complete the questionnaire does not mean that SBA is challenging the borrower’s certification under the CARES Act.  SBA will apply a “totality of the circumstances test” and using a “multi-factor analysis.”

NCFC recently hosted a webinar in which legal and tax experts discussed the implications of PPP loan funds and SBA’s new loan necessity questionnaires.  The webinar may be viewed here.

Final Regulations Under Section 274. Treasury and IRS last week issued final regulations on the deduction for qualified transportation fringe and commuting benefits (including parking benefits), as modified under the Tax Cuts and Jobs Act. The final regulations address the elimination of the deduction under section 274 for expenses related to certain transportation and commuting benefits provided by employers to their employees.  The regulations also provide guidance on determining nondeductible expenses and on applying exceptions that may allow such expenses to be deductible.

The guidance is applicable to taxable years beginning after the date it is published in the Federal Register.  Treasury and IRS said “taxpayers may choose to apply §1.274-13(b)(14)(ii) [optional rule for federally declared disasters] to taxable years ending after December 31, 2019.”  Taxpayers may continue to rely on proposed reg sections 1.274-13 through 1.274-14 or the guidance provided in Notice 2018-99 for parking expenses, other QTF expenses, and transportation and commuting expenses, as applicable, paid or incurred in taxable years beginning after December 31, 2017 and before the date the final regulations are published in the Federal Register. 

“Virtual” LTA Conference Sessions Taking Shape.  The annual LTA Conference will take place February 10-11 as part of NCFC’s Annual Meeting.  Topics will include:

• Current Developments in Antitrust Litigation and Enforcement
• Section 199A Implementation Best Practices
• Accounting Method Developments
• Covid-19 and Price Gouging
• Co-op Tax Roundtable Discussion

PPP Loan Forgiveness: The Unintended Consequences

December 4, 2020 – This webinar will feature a panel of experts discussing financial reporting and tax issues surrounding Paycheck Protection Program loan receipts, as well as new information reporting requirements issued by the Small Business Administration. Barry Jencik (Greendyke, Jencik); Eric Krienert (Moss Adams); Ken Logsdon (Dorsey); and Rebecca Smith (CLA) will offer their insights during this one-hour session.

Senate GOP Leadership Release Phase 4 COVID Relief Proposal

July 28, 2020 – Backed by the White House, Senate Republican leadership released their version of a Phase 4 COVID relief measure, called the HEALS Act (Health; Economic Assistance; Liability Protection; and Schools Act), that spends about $1 trillion. You will recall that the House passed their $3 trillion Phase 4 relief measure at the end of May.

Highlights of the Senate GOP leadership proposal are included below. Senate Republican leadership released supporting documents in addition to the legislative text for the various components of the measure. We did not attach these materials as doing so might cause a jam on the information superhighway! Please contact us if you want some or all of the materials provided with the release of the proposal.

The proposal was released without the full consensus among rank-n-file Senate Republicans. Some conservatives want to see far less spending amid record deficits, while others want more for state and local governments. Despite dissention in the ranks, negotiations are underway between the White House, Senate GOP leadership, and House and Senate Democrats. They will need to overcome a great divide between the two parties on what should be included in another round of relief.

Most notably, the treatment of continued unemployment benefits is a main point of contention. The Senate GOP leadership proposal would take the current $600 additional payments and reduce them to $200 per week for two months. After that, states would be responsible for ensuring the unemployed receive 70 percent of their previous wages. Democrats have called for a full extension of the $600 per week additional payments through January 2021. Other areas of contention likely will involve SNAP benefits, liability protections, and school funding tied to re-opening.

Congress is set to recess on August 7 for their August district work period, which does not leave a lot of time to bridge the gap between the two parties on a relief package. We will continue to monitor and engage as negotiations are underway, and provide updates as details emerge. 

Key Provisions of Interest in the HEALS Act:

Paycheck Protection Program.  The Senate Republican proposal would extend the PPP through December 31, 2000 and provide for a total of $749 billion ($520 billion has been spent as of July 24).  In addition, it would expand eligible expenses that could be allowed for forgiveness.  Other changes include:

• Second Draw Loans.  The proposal would allow for second loans of up to $2 million to eligible businesses that:
  • Meet the SBA’s revenue size standard, if appropriate;
  • Have 300 or fewer employees; and
  • Demonstrate at least a 50 percent reduction in gross receipts in the first or second quarter relative to the same 2019 quarter.

• Continued Access to the PPP.  Moving forward, the maximum amount borrowers may receive for a first loan is reduced from $10 million to $2 million.
• Calculating Maximum Loan Amounts for Farmers.  Establishes a specific loan calculation for farmers who operate as a sole proprietor, independent contractor, or self-employed individual, who file a Schedule F based on their 2019 gross income.
• Seasonal Employers.  The proposal defines seasonal employers to be eligible recipients which operate for no more than seven months in a year or earned no more than one-third of receipts in any six months in the prior calendar year.

Hiring and Retention Payroll Tax Credit. The CARES Act provided an employee retention tax credit in the form of a refundable payroll tax credit equal to 50 percent of wages. The Senate bill would increase the applicable percentage of qualified wages to 65 percent, subject to certain limitations. The provision would increase the 100-employee threshold to 500 employees and would allow employers to be eligible for both the credit and the Paycheck Protection Program, but with limitations to prevent overlapping benefits.

Tax Credit for PPE. The bill would provide a refundable payroll tax credit equal to 50 percent of an employer’s qualified employee protection expenses, such as testing for COVID-19, protective personal equipment, cleaning supplies, modifications to workspaces, and contactless point-of-sale systems and other technology to track employee interactions with customers. The credit is capped at $1,000 for each of the first 500 employees, plus $750 for each employee between 500 and 1000, plus $500 for each employee over 1,000. The credit also permits farmers to claim a refundable credit against income taxes for COVID-19 related expenses. Self-employed individuals are treated as if they are an employer with a single employee for purposes of the credit.

Adjustment to Unemployment Compensation Benefits.  Currently, the CARES Act provides an additional payment of $600 per week to individuals receiving unemployment insurance benefits through July 2020. The Senate bill would provide supplemental payments of $200 per week through September. Starting in October, the $200 payment would be replaced with a payment (up to $500) that, when combined with state unemployment benefits, would replace 70 percent of lost wages.

Temporary Expansion of Work Opportunity Tax Credit. The Senate bill would add 2020 qualified COVID-19 unemployment recipients as an eligible group under the Work Opportunity Tax Credit.

Payments to Individuals and Families. As under the CARES Act, individuals with adjusted gross income up to $75,000 ($150,000 married) are eligible for a $1,200 ($2,400 married) rebate and an additional $500 per dependent rebate. Under the CARES Act, the additional $500 was limited to taxpayers with a dependent child under 17; the Senate bill would provide the additional $500 to individuals with dependents of any age, subject to income phase-outs.

Net Operating Loss Carryback for Farmers. The will would allow farmers who elected a two-year net operating loss carryback prior to the CARES Act to elect to retain that two-year carryback rather than claim the five-year carryback provided in the CARES Act. It would also farmers who previously waived an election to carry back a net operating loss to revoke the waiver. The provision applies retroactively as if it was included in the CARES Act.

Agriculture Funding. The proposal provides an additional $20 billion in funding to the U.S. Department of Agriculture to support agricultural producers, growers, and processors impacted by COVID-19.

• Farm Service Agency – $76.4 million. The proposal provides additional funding to support temporary staff and overtime costs resulting from increased volume of applications in response to COVID-19.
• Rural Development – $133.4 million
• Salaries and Expenses – $20 million. The proposal provides for administrative expenses such as overtime and information technology needs.
• Rental Assistance Program – $113.4 million.  The proposal provides Rental Assistance (RA) to all currently assisted wage-earning residents if they lost all wages and were unable to pay rent. 
• Food and Nutrition Service (FNS) – $250 thousand.  The proposal provides additional funding to cover the cost of staff overtime for FNS employees.
• Foreign Agricultural Service (FAS) – $2 million.  The proposal provides additional funding to cover the cost of repatriating FAS employees stationed abroad.
• Agriculture Quarantine and Inspection – $245 million. The proposal provides additional funding to cover salary expenses to offset the decrease in user fee revenue caused by business disruptions.

Payroll Protection Program (PPP) – Program Extended Through August 8

July 6, 2020 – President Trump on July 4 signed S. 4116, reauthorizing lending under the Paycheck Protection Program through August 8, 2020.  The five-week extension provides an opportunity for businesses to apply for the funds remaining in the program.  As of late last week, more than $130 billion was still unspent.

Updated Frequently Asked Questions on the PPP can be found here.  Information about the program rules that have been released by SBA and Treasury can be found here.

Contact NCFC Staff Marlis Carson (mcarson@ncfc.org) or Kevin Natz (knatz@ncfc.org) with questions regarding PPP loans.

Payroll Protection Program (PPP) – SBA and Treasury Issue Updated Interim Final Rule

June 29, 2020 – Last week, the Small Business Administration and Treasury Department issued an interim final rule to implement changes that the PPP Flexibility Act of 2020 made to the program earlier in the month. This interim final rule updates the first loan forgiveness interim final rule and the first loan review rule that were issued on May 22, to conform to the amendments under the Flexibility Act. The “Revisions to Loan Forgiveness and Loan Review Procedures Interim Final Rules” addresses such provisions such as:

• Reducing, from 75 percent to 60 percent, the portion of PPP loan proceeds that must be used for payroll costs for the full amount of the PPP loan to be eligible for forgiven.
• Providing for a minimum maturity of five years (from two) for all PPP loans made on or after the date of enactment of the Flexibility Act (June 5, 2020), and permits lenders and borrowers to extend the maturity date of earlier PPP loans by mutual agreement.
• Extending the length of the covered period from eight to 24 weeks, while allowing borrowers that received PPP loans before June 5, 2020 to elect to use the original eight-week covered period.
• Changes to reductions to loan forgiveness amounts.

Updated Frequently Asked Questions can be found here.  Information about the program rules that have been released by SBA and Treasury can be found here.

Contact NCFC Staff Marlis Carson (mcarson@ncfc.org) or Kevin Natz (knatz@ncfc.org) with questions regarding PPP loans.

New Tax and Accounting Guidance, Including Employee Retention Credit

June 22, 2020 – Several items of tax guidance have been issued recently and may be of interest to cooperatives and their members, including guidance under the CARES Act.

Employee Retention Credit.  The Internal Revenue Service has updated several of its frequently asked questions regarding the employee retention credit under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

These updates include:

• determining what types of governmental orders may be taken into account for purposes of the employee retention credit (Question 28);
• determining when an employer’s trade or business operations are considered to be fully or partially suspended due to a governmental order, including allowing an essential business with certain non-essential functions to be treated as partially suspended by a governmental order (Questions 30, 33, 34, and 35);
• determining when an employer is considered to have a significant decline in gross receipts and determining the maximum amount of an eligible employer’s employee retention credit (Question 46);
• determining qualified wages (Question 58); and
• special issues for employers (Questions 88, 90, and 92).

PPP Accounting Guidance.  The Association of International Certified Professional Accountants (AICPA) has provided guidance on accounting for Paycheck Protection Program loans, including FAQs and a loan forgiveness services matrix.

Section 274.  On Friday, the IRS issued proposed regulations on the deduction of qualified transportation and commuting benefits. The proposed regulations address the elimination of the deduction under section 274 for expenses related to certain transportation and commuting benefits provided by employers to their employees in taxable years beginning after December 31, 2017, as provided under the Tax Cuts and Jobs Act.  The proposed regulations provide guidance to determine the amount of such expenses that is non-deductible and apply certain exceptions under section 274(e) that may allow such expenses to be deductible.

Like-Kind Exchanges. Treasury and IRS recently issued proposed regulations implementing the Tax Cuts and Jobs Act provision limiting section 1031 to exchanges of real property.  These proposed regulations provide a definition of real property and a rule addressing a taxpayer’s receipt of personal property that is incidental to real property the taxpayer receives in the exchange.

New Markets Relief. The IRS recently announced coronavirus-related tax relief to investors and businesses involved in new markets tax credit transactions.  Notice 2020-49 provides relief to community development entities (CDEs) and qualified active low-income community businesses (QALICBs) investing in and conducting business in low-income communities. Treasury and IRS said, “This notice postpones to December 31, 2020, the due dates for making investments, making reinvestments, and expending amounts for construction of real property under section 45D of the Internal Revenue Code (Code) due to be performed or expended on or after April 1, 2020, and before December 31, 2020.”

Payroll Protection Program (PPP) – SBA Issues New Forgiveness Applications and Interim Final Rule

June 17, 2020 – Today, SBA posted a revised PPP loan forgiveness application implementing the PPP Flexibility Act of 2020, signed into law by President Trump on June 5, 2020.  In addition to revising the full forgiveness application, SBA also published a new EZ version of the forgiveness application that applies to borrowers that:

• Are self-employed and have no employees; or
• Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; or
• Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%.

According to SBA, the EZ application requires fewer calculations and less documentation for eligible borrowers. Details regarding the applicability of these provisions are available in the instructions to the new EZ application form.  Both applications give borrowers the option of using the original 8-week covered period (if their loan was made before June 5, 2020) or an extended 24-week covered period. 

The Full Forgiveness Application can be found here.

• The instructions for borrowers can be found here. 

The EZ Forgiveness Application can be found here.

• The instructions for borrowers can be found here.

Additionally, SBA issued a new Interim Final Rule reflecting the changes Congress made to PPP loan forgiveness. The Interim Final Rule revises the previously published third and sixth Interim Final Rules, and specifically addresses the amount of employee compensation which may be forgiven under the extended 24-week covered period. That Interim Final Rule can be found here.

Contact NCFC Staff Marlis Carson (mcarson@ncfc.org) or Kevin Natz (knatz@ncfc.org) with questions regarding PPP loans.

The Centers for Disease Control and Prevention Publishes an Agricultural Employer Checklist for Creating a COVID-19 Assessment and Control Plan

June 15, 2020 – As a follow-up to the Joint Interim Guidance for Agriculture Workers and Employers Related to COVID-19 issued by the Centers for Disease Control and Prevention (CDC) and the U.S. Department of Labor (DOL) earlier this month, the CDC published an Agricultural Employer Checklist for Creating a COVID-19 Assessment and Control Plan for applying specific preparation, prevention, and management measures. The checklist can be used to reassess, update, and modify current assessment and control plans on a regular basis or as conditions change.

The 16-page checklist covers five sections:

• Section 1: Assessment
• Section 2: Control Plan based on the Hierarchy of Controls

• • Screening and Monitoring Workers
  • Managing Sick Workers
  • Addressing Return to Work after Worker Exposure to COVID-19
  • Engineering Controls
  • Cleaning, Disinfection, and Sanitation
  • Administrative Controls
  • Personal Protective Equipment (PPE)

• Section 3: Special Considerations for Shared Housing
• Section 4: Special Considerations for Shared Transportation
• Section 5: Special Considerations for Children

Please contact Kelsey Billings (kbillings@ncfc.org) if you have any questions.

SBA and Treasury Issue Interim Final Rule on PPP Provisions

June 12, 2020 – As expected, the Small Business Administration and the Treasury Department yesterday issued an interim final rule implementing changes made to the Paycheck Protection Program by the Paycheck Protection Program Flexibility Act of 2020, which was signed by President Trump on June 5.  This interim final rule addresses key provisions such as the loan maturity, deferral of loan payments, and forgiveness provisions.

The provisions in the interim final rule related to loan forgiveness and deferral periods for PPP loans are effective March 27, 2020; the provision relating to the maturity date of PPP loans is effective June 5, 2020.  This guidance modifies SBA’s interim final rule posted on April 2, 2020.

For a discussion of the new PPP provisions, tune in to NCFC’s most recent webinar on the program.

Contact NCFC Staff Marlis Carson (mcarson@ncfc.org) or Kevin Natz (knatz@ncfc.org) with questions regarding PPP loans.

Payroll Protection Program (PPP) – SBA and Treasury to Issue Additional Guidance; Update Forms

June 9, 2020 – On June 5, President Trump signed the Paycheck Protection Program Flexibility Act of 2020, which makes a number of changes to the PPP, including extending the minimum maturity period, extending the forgiveness period, reducing the payroll cost limitation on forgiveness, adding exemptions to employee rehiring requirements, revising the loan deferral period, and lifting the CARES Act’s prohibition on payroll tax deferral. 

In a statement yesterday SBA and Treasury said they will quickly issue rules and guidance, a modified borrower application form, and a modified loan forgiveness application to implement the following changes:

• Extend the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement, providing substantially greater flexibility for borrowers to qualify for loan forgiveness.  Borrowers who have already received PPP loans retain the option to use an eight-week covered period.
• Lower the requirements that 75 percent of a borrower’s loan proceeds must be used for payroll costs and that 75 percent of the loan forgiveness amount must have been spent on payroll costs during the 24-week loan forgiveness covered period to 60 percent for each of these requirements. If a borrower uses less than 60 percent of the loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60 percent of the loan forgiveness amount having been used for payroll costs.
• Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees for borrowers that are unable to return to the same level of business activity that the business was operating at before February 15, 2020, due to compliance with requirements or guidance issued between March 1, 2020, and December 31, 2020, by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to worker or customer safety requirements related to COVID–19.
• Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees, to provide protections for borrowers that are both unable to rehire individuals who were employees of the borrower on February 15, 2020, and unable to hire similarly qualified employees for unfilled positions by December 31, 2020.
• Increase to five years the maturity of PPP loans that are approved by SBA (based on the date SBA assigns a loan number) on or after June 5, 2020.
• Extend the deferral period for borrower payments of principal, interest, and fees on PPP loans to the date that SBA remits the borrower’s loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period).
• In addition, the new rules will confirm that June 30, 2020, remains the last date on which a PPP loan application can be approved.

We will forward these new rules, forms and guidance as they become available. 

Contact NCFC Staff Marlis Carson (mcarson@ncfc.org) or Kevin Natz (knatz@ncfc.org) with questions regarding PPP loans.

NCFC Webinar to Discuss PPP Loan Forgiveness Requirements

June 5, 2020 – The third in a series of NCFC webinars on the Paycheck Protection Program loan requirements. Ken Logsdon of Dorsey & Whitney, Jeffrey Scheer of Bond Schoeneck & King, and Levi Smith of Fredrikson & Bryon give an overview of recent developments and take questions from participants.

The webinar features a discussion of recently released guidance regarding PPP loan forgiveness. The Interim Final Rule on Loan Forgiveness can be found here.  It is intended to help borrowers prepare and submit loan forgiveness applications, to assist lenders who will be making the loan forgiveness decisions, and to inform borrowers and lenders of SBA’s process for reviewing loan applications and loan forgiveness applications. SBA and Treasury also issued an Interim Final Rule on Loan Review Procedures and Related Borrower Responsibilities. It can be found here.  As noted in an earlier update, businesses can seek forgiveness at the conclusion of the eight-week covered period, which begins with the disbursement of their loans.  The application and instructions are here.

CDC, DOL Issue Interim Guidance for Ag Workers and Employers

June 3, 2020 – The Centers for Disease Control and Prevention (CDC) and the U.S. Department of Labor (DOL) have published joint Interim Guidance for Agriculture Workers and Employers Related to COVID-19. The guidance addresses agriculture work sites, shared worker housing, and shared worker transportation vehicles.

The guidance recommends that owners and operators:

• Screen agricultural workers for coronavirus symptoms, manage workers who have symptoms upon arrival at work or who become sick during the day, and address return to work after worker exposure;
• Use touch-free clocks and automatic doors, install plastic barriers when distances of six feet between individuals are not possible, and rearrange chairs and tables in break areas;
• Implement cleaning, disinfection, and sanitation protocols;
• Train workers in a language they understand on the signs and symptoms of coronavirus, proper infection control and social distancing practices, and what to do if they or a coworker experience symptoms;
• Encourage workers to use cloth face coverings in certain circumstances (e.g., when utilizing shared methods of transportation); and
• Provide and train workers on proper use of personal protective equipment through videos or in-person visual demonstrations.

DOL’s news release can be found here.

The full Interim Guidance can be found here.

The CDC and DOL plan to update the guidance as needed and as additional information becomes available. Please reach out to Kelsey Billings (kbillings@ncfc.org) if you have any questions.

Webinar Monday on USDA’s new Business & Industry CARES Act Program

May 28, 2020 – Last week, USDA announced it is making available up to $1 billion in loan guarantees to help rural businesses meet their working capital needs during the coronavirus pandemic under USDA’s Business & Industry (B&I) CARES Act Program.  An overview of the program can be found here: https://www.rd.usda.gov/programs-services/business-and-industry-cares-act-program

NCFC has partnered with the National Cooperative Business Association and USDA to host a webinar to cover the requirements and specifics of the program on Monday, June 1, at 2:00 p.m.

This webinar will feature the following presenters:

• Doug O’Brien, President and CEO, NCBA CLUSA
• Chuck Conner, President and CEO, NCFC
• Bette Brand, Deputy Undersecretary of Rural Development, USDA
• Mark Brodziski, Acting Administrator of Rural Business-Cooperative Service, USDA

Please use this link to register for the webinar:  https://register.gotowebinar.com/register/7880541092089786123

While this is another option that is available to cooperatives and producers in need of working capital over the next 12 months, to help determine whether this program may be of interest to your cooperative or your members, a few details of the new B&I program include:

• All rural businesses are eligible regardless of size (near towns with fewer than 50,000 people).
• This program is expanded so producers will be eligible if they are ineligible for an FSA loan.
• Unlike the existing B&I loan program that is intended largely for investments such as buildings and equipment, the B&I CARES Act loans can only be used for working capital.
• Maximum loan amount is $25 million.
• Any SBA Paycheck Protection Program or Economic Injury Disaster Loan that has already been disbursed will be deducted from a business’ loan amount.
• The B&I CARES Act program has more generous terms than the regular B&I program, such as 10-year maximum term as opposed to seven years, and the ability to defer principal payments.
• A guarantee fee of two percent of the loan will be imposed.

Contact NCFC Staff Kevin Natz (knatz@ncfc.org) with questions regarding the B&I Cares Act program.

Payroll Protection Program (PPP) – SBA and Treasury Issue Further Guidance

 The SBA and the Treasury Department have released new guidance regarding PPP loan forgiveness.

The Interim Final Rule on Loan Forgiveness can be found here.  It is intended to help PPP borrowers prepare and submit loan forgiveness applications; help PPP lenders who will be making the loan forgiveness decisions; and inform borrowers and lenders of SBA’s process for reviewing PPP loan applications and loan forgiveness applications.

SBA and Treasury also issued an Interim Final Rule on Loan Review Procedures and Related Borrower Responsibilities.  It can be found here.   As noted in an earlier update, businesses can seek forgiveness at the conclusion of the eight-week covered period, which begins with the disbursement of their loans.  The application and instructions are here.

On the Hill:  The Senate left for the Memorial Day recess on Friday without taking action on a bipartisan proposal to extend the deadline in which to apply for a PPP from June 30 to the end of the year and to double the current eight-week period in which businesses must use funds in order to have loans forgiven.  There was an effort to approve it by unanimous consent, but now it’s unclear whether the Senate will act to approve the measure during a pro forma session during the break or wait until members return to Washington in June. The timing of this is important because the eight-week loan-forgiveness periods begin to expire at the end of next week and in early June for loans received soon after the PPP opened on April 3. 

Meanwhile, the House is expected to vote this week on a separate PPP measure.  That bill would also extend the time businesses have to rehire employees and qualify for loan forgiveness under the program beyond the existing June 30 deadline, while extending the period for paying back portions of the loans that aren’t forgiven beyond two years.  The bill would also eliminate the “75-25 rule” the administration put in place that requires businesses to spend at least 75 percent of the loan on payroll costs and no more than 25 percent on other expenses like rent and utilities to be eligible for loan forgiveness.

Contact NCFC Staff Marlis Carson (mcarson@ncfc.org) or Kevin Natz (knatz@ncfc.org) with questions regarding PPP loans.

Farmer Co-ops Urge USDA to Consider All Forms of Fruits and Vegetables in Food Purchases

May 21, 2020 – The National Council of Farmer Cooperatives (NCFC) today urged the U.S. Department of Agriculture (USDA) to consider the impacts of the COVID-19 pandemic and economic crisis on all forms of fruits and vegetables as the department develops criteria for food purchases. The call came in a letter to Agriculture Secretary Sonny Perdue, who recently announced that USDA will be making an addition $873.3 million in Section 32 purchases of specialty crops for distribution to food banks.

A copy of the letter is available at: http://ncfc.org/wp-content/uploads/2020/05/NCFC-Letter-to-Perdue-RE-Sec-32-Purchases-FINAL.pdf.

NCFC LTA/GAC Conference Call – COVID-19 Response Activities

May 15, 2020 – Topics discussed on this webinar include:

• Paycheck Protection Program – Ever Changing FAQs and Guidance
• Status of USDA’s Rulemaking to disperse relief payments to producers
• Farm to Food Box Initiative
• House Phase 4 relief legislation and next steps

SBA Payroll Protection Program (PPP) – Repayment Date Extended to May 18

May 13, 2020 – As noted yesterday, SBA provided a safe harbor for borrowers who received an initial PPP loan in an amount less than $2 million.  (See FAQ #46.)  Today the SBA extended the May 14 deadline for all borrowers who wish to repay their loans.  The deadline is now May 18; borrowers do not need to apply for this extension.

The new deadline was announced in FAQ 47:

47. Question: An SBA interim final rule posted on May 8, 2020 provided that any borrower who applied for a PPP loan and repays the loan in full by May 14, 2020 will be deemed by SBA to have made the required certification concerning the necessity of the loan request in good faith. Is it possible for a borrower to obtain an extension of the May 14, 2020 repayment date?

Answer: Yes, SBA is extending the repayment date for this safe harbor to May 18, 2020, to give borrowers an opportunity to review and consider FAQ #46. Borrowers do not need to apply for this extension. This extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor.

Contact NCFC Staff Marlis Carson (mcarson@ncfc.org) or Kevin Natz (knatz@ncfc.org) with questions regarding PPP loans.

Agricultural Transportation Working Group

May 13, 2020 – Good news, FMCSA’s Emergency Declaration that exempts truck drivers hauling supplies for the COVID-19 relief effort from FMCSA’s Part 390-399 rules has been extended through June 14^th. 

https://www.fmcsa.dot.gov/emergency/extension-expanded-emergency-declaration-no-2020-002-under-49-cfr-ss-39025

Statement of NCFC President Chuck Conner on HEROES Act

May 13, 2020 – “As the House of Representatives considers additional legislation to address the economic crisis caused by the pandemic, NCFC is pleased that the draft of the HEROES Act, H.R. 6800, contains provisions targeted to agriculture.”

View the full news release at: http://ncfc.org/press-release/statement-ncfc-president-chuck-conner-heroes-act/

House releases Phase 4 legislation; Vote on Friday

May 12, 2020 – The House is expected to meet on Friday, May 15, 2020, to consider Phase 4 COVID-19 relief legislation, called the HEROES Act (H.R. 6800). In addition, the House is expected to vote on a Rule change related to remote work. 

The measure proposes $3 trillion in stimulus relief targeted at states, local governments, and individuals. It is unlikely that the bill will move further than House consideration, but it serves as the opening bid in negotiations with the White House and Senate Republicans.

The Phase 4 legislation can be viewed here. Below are additional materials on the relief bill, including:

• an updated section-by-section summary; and
• a one-page summary; and
• a summary of the state and local relief provisions in the bill.

Among its key provisions, the bill would provide:

• Almost $1 trillion in aid for state and local governments as well as $1,200 cash payments to individuals and $1,200 for dependent children, up to $6,000 a household. It also would extend a $600 weekly increase to unemployment insurance into January.
• $200 billion to fund what it describes as “hazard pay” for essential workers who have had to risk exposure to the virus as they stay on the job.
• $75 billion allocated for virus testing and contract tracing.
• $16 billion for public transportation systems. $11.8 billion would be allocated to urban areas with populations over 3 million, $4 billion would go to transit agencies that need “significant additional assistance” to maintain basic services.
• $100 billion for schools (colleges and K-12 schools)

The Phase 4 House bill includes the following tax provisions:

• Eliminates the limit on the deduction of state and local taxes for 2020 and 2021.
• Provides a 30 percent refundable payroll tax credit for expenses reimbursed or paid for the benefit of an employee for family, living, or funeral expenses incurred because of COVID-19. Credit increases to 50 percent if the services are essential work.
• Employee retention credit is increased from 50 percent to 80 percent. 
  • Gross receipts requirement is modified to allow a partial credit.
  • Large employer is defined as an employer with greater than 1,500 full time employees and gross receipts of greater than $41,500,000 in 2019.
  • Group health plan expenses can be considered qualified wages even when no other wages are paid to the employee.
• Businesses receiving Paycheck Protection Program loan forgiveness may defer payment of payroll taxes under Section 2302 of the CARES Act.
• Loan forgiveness for EIDL grants is excluded from gross income.
• Expenses paid or incurred with proceeds from Payment Protection Program and EIDL loans that are forgiven do not result in a denial of a deduction. (A response to IRS Notice 2020-32.)
• Limits net operating loss carrybacks to taxable years beginning on or after January 1, 2018, retroactive to the date of enactment of the CARES Act (March 27, 2020).

Also, the bill includes several provisions impacting the food and agriculture industry:

• Creates a new dairy donation program to help prevent milk from being dumped and to reroute products to feeding programs.
• Provides indemnity to producers to cover the cost of culling animals that can’t be processed because of meatpacking facility closures.
• $100 million to assist specialty crop producers.
• $50 million to support local farmers and $50 million for beginning farmers and ranchers.
• Requires Secretary of Agriculture to notify Congress before sending direct payments to producers under the CCC.
• Processing facilities shut down from coronavirus outbreaks would qualify for CCC payments.
• $20 million to expand mental health programs for farmers.
• $2 billion for a temporary expansion of the FCC’s Rural Health Care Program to help subsidize broadband service.
• $50 per household where someone has been laid off or furloughed to help pay for internet service costs.

The bill would also offer direct assistance to biofuels producers by paying 45 cents for each gallon a qualified biofuel plant produced between Jan. 1 and May 1 of this year.

The Secretary of Agriculture also can pay a plant that produced no fuel in a given month at a rate of 45 cents a gallon for half the amount of fuel the plant produced in the corresponding month last year. The bill does not appropriate money for this section, but authorizes the Treasury Department to pay for it out of unobligated funds.

The House bill would also add $10 billion to cover the cost of increases in the Supplemental Nutrition Assistance Program (SNAP), due to the influx of food assistance applications. SNAP benefits would be increased by 15 percent, raising the minimum payment by $30 per month. The measure also would provide an extra $1.1 billion to the Special Supplemental Nutrition Assistance Program for Women, Infants and Children to provide food to low-income pregnant women or mothers with young children who lose their jobs or are laid off because of the pandemic. Child nutrition programs would receive a $3 billion boost, and food banks would get an additional $150 million.

The Phase 4 legislation also contains pension relief measures of interest. In addition to providing relief for multiemployer pension plans (collective bargaining/union plans), the legislation would provide needed relief for single employer pension plans:

• All shortfall amortization bases for all plan years beginning before January 1, 2020 (and all shortfall amortization installments determined with respect to such bases) would be reduced to zero.
• All shortfalls would be amortized over 15 years, rather than seven years.

To preserve the stabilizing effects of smoothing put in place in 2012, 2014, and 2015, the following provisions are included:

• The 10% interest rate corridor would be reduced to 5%, effective in 2020.
• The phaseout of the 5% corridor would be delayed until 2026, at which point the corridor would, as under current law, increase by 5 percentage points each year until it attains 30% in 2030, where it would stay.
• A 5% floor would be put on the 25-year interest rate averages. This floor would establish stability and predictability on a longer-term basis, so that interest rate variations do not create excessive volatility. In addition, this floor would protect funding rules from the extremes of interest rate movements.
• This provision is effective for plan years beginning after December 31, 2019.

SBA Payroll Protection Program (PPP) – Best Practices for Demonstrating Need

May 11, 2020 – The Paycheck Protection Program was launched on April 3 with very few parameters regarding eligibility.  Subsequently, the SBA announced it will audit all loans of $2 million and above and may audit loans under $2 million. 

According the SBA, borrowers must be able to certify that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers that applied for a PPP loan prior to April 23, 2020, may repay the loan in full by Thursday, May 14, if they believe they could not make such certification in good faith.  Borrowers could be subject to criminal investigations and civil proceedings under the False Claims Act.

On May 5 NCFC hosted a webinar on the PPP program requirements.  Ken Logsdon of Dorsey &Whitney and Levi Smith of Fredrikson & Byron took questions on the PPP program and the potential for audits.  A recording of the webinar is available here.

The following is a summary of the remarks given and is not intended as legal advice.  Consult your own legal counsel for advice on your particular situation.

Suggested Best Practices for Co-ops:

Conduct an analysis and create a contemporaneous record using the information available today.  Produce an internal memo or white paper for review by the board. The more quantitative the analysis, the better.

In the memo, consider including three types of financial projections: base case, best case, and worst case — with and without PPP funds.  Include any other sources of revenue. 

• Consider that this may be a “U-shaped” recovery and consider the long-term impacts on the co-op’s finances. 
• Consider economic impacts on suppliers and customers and their ability to pay on a timely basis.
• Consider other factors, such as the potential for a COVID-19 outbreak at the co-op’s processing facility or other workplace and the potential impacts on continued operations.

Distribute the memo to the board; conduct a board meeting; discuss the memo; and memorialize the discussion in the minutes. Adopt a resolution considering current facts and circumstances. 

In addition, consider whether the co-op has any “bad facts.”  For example, did the co-op pay bonuses to executives at the time it received the loan funds?  This could weigh toward returning the loan.

Be able to explain why the co-op is taking the funds if it has a well-capitalized parent company.  Pursuant to SBA guidance, any such co-op should consider sources of liquidity available to a parent company that could be used to support the co-op. If such sources of liquidity are adequate and available under terms not significantly detrimental to the business, the co-op should consider returning the loan. 

Q&As from the webinar:

Q:  Should the co-op have a separate bank account for PPP funds?

A:  Nothing requires separate segregated fund, but it is advisable.  Forgiveness is closely tied to use of the funds and by having a separate account the borrower can show money was used for payroll, rent, etc.

Q:  What if a co-op pays patronage at the end of year?  Can the SBA argue the co-op really did not need the PPP funds?

A:  This fact would be part of a facts and circumstances analysis by SBA.  The co-op should be able to highlight the reasons why projections showed the co-op thought it would need the funds and that it considered many factors.

Contact NCFC Staff Kevin Natz (knatz@ncfc.org) or Marlis Carson (mcarson@ncfc.org) with questions regarding PPP loans.

Paycheck Protection Program: Implications for Patronage Payments

Commercial Routing Assistance

May 8, 2020 – With the support of the DHS Cybersecurity and Infrastructure Security Agency (CISA), Idaho National Laboratory (INL) has designed, developed, and deployed a capability for truckers and other commercial drivers in the U.S. to understand restrictions that they might encounter as they travel across the country. The Commercial Routing Assistance (CRA) tool merges coordinated and vetted data streams, plots multiple automated or custom routing options, and visualizes the wide variety of state regulations and actions that a driver would encounter along a route. With the CRA, commercial operators can plan vehicle movements across multiple states quickly, particularly during emergencies. Learn more at: cra.inl.gov 

Paycheck Protection Program Loan Requirements Webinar

May 5, 2020 – On April 29, Treasury issued an updated FAQ confirming that the Small Business Administration will audit all Paycheck Protection Program (PPP) loans in excess of $2 million upon submission of a loan forgiveness application. Treasury also provided a safe harbor provision if the borrower repays the loan by May 7.

This webinar discusses the Paycheck Protection Program loan requirements. Ken Logsdon of the Dorsey law firm and Levi Smith of Fredrikson & Bryon give an overview of the PPP requirements and take questions from participants.

Farmer Co-ops Express Concern Over Movement Restrictions on H-2A Workers in Mexico

May 5, 2020 – The National Council of Farmer Cooperatives (NCFC) today urged Secretary of Agriculture Sonny Perdue to intervene with the State Department to urge them to work with the Mexican government to ensure that H-2A agricultural guest workers can reach U.S. consulates in that country.

View the full news release at: http://ncfc.org/press-release/farmer-co-ops-express-concern-movement-restrictions-h-2a-workers-mexico/

A copy of the letter is available at: http://ncfc.org/wp-content/uploads/2020/05/NCFC-Letter-to-Perdue-RE-Mexican-Quarantine-Orders-FINAL.pdf.

Opening America’s Workplaces Again National Online Dialogue

May 1, 2020 – The U.S. Department of Labor (USDOL) continues its efforts to support American workers and position the economy for a strong rebound. The USDOL is hosting a national online dialogue to solicit ideas about challenges that may be faced as businesses reopen and how best to help employers and workers reopen America’s workplaces safely.

Join your fellow citizens and share your best ideas about (1) reopening businesses, (2) commuting safely, (3) working safely, (4) accommodating members of vulnerable populations, (5) supporting America’s families, and (6) reducing regulatory burdens. Don’t miss your chance—please share your feedback by Thursday, May 7! Click here to access the Opening America’s Workplaces Again National Online Dialogue webpage

Land O’Lakes and CoBank Send Letter to Governors on Rural Broadband and Telemedicine

May 1, 2020 – NCFC members Land O’Lakes and CoBank, along with Microsoft, the Mayo Clinic, and Health Partners, sent a letter to every state’s governor on the urgent need to expand rural broadband access that the COVID-19 pandemic has exposed. They note that access is needed now, more than ever, to support working from home, distance learning and telemedicine.

To help facilitate that, the companies noted that they have started offering free and open WiFi access to local communities for the coming months near many of their offices and facilities, beginning in Minnesota and expanding into other states. In fact, as of early this week, Land O’Lakes and its local co-op affiliates had opened WiFi in over 100 locations.

The letter also asks the governors to for partnerships to help expand the effort to more states and more companies and to support policies to bolster telemedicine in their states.

This effort is an outstanding example of how co-ops are stepping up to the plate to help their fellow citizens during this unprecedented time. NCFC is collecting similar stories of co-ops giving back to their communities; for more information, contact Justin Darisse.

Rural Broadband and Telemedicine Letter to Governors

Guidance on PPP Deductibility; PPP Loan Limits; Electronic Filing for PLR Requests

May 1, 2020 – Yesterday the IRS issued Notice 2020-32 regarding the deductibility of otherwise deductible expenses when a taxpayer receives a loan pursuant to the Paycheck Protection Program (PPP).  The IRS said:

This notice clarifies that no deduction is allowed under the Internal Revenue Code (Code) for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Public Law 116-136, 134 Stat. 281, 286-93 (March 27, 2020) and the income associated with the forgiveness is excluded from gross income for purposes of the Code pursuant to section 1106(i) of the CARES Act.

The Small Business Administration and Treasury issued an interim final rule limiting the amount of PPP loans that any single corporate group may receive.  SBA and Treasury said this change was made to “preserve the limited resources available to the PPP program.” The interim final rule also provides additional guidance on the criteria for non-bank lender participation in the PPP.

Finally, the IRS issued Rev. Proc. 2020-29 , which allows taxpayers to electronically submit requests for private letter rulings and other legal advice and allows electronic signatures on required documents submitted in conjunction with these requests. The IRS will continue to allow paper submissions in addition to electronic submissions. Rev. Proc. 2020-29 will remain in effect until modified or superseded.

COVID-19 Relief and Guidance for Employee Benefit Plans

April 29, 2020 – The Department of Labor Employee Benefits Security Administration (EBSA) issued the following coronavirus-related relief and guidance for employee benefit plans:

• A final rule issued by the Labor Department, the Treasury Department and the IRS extending deadlines for plan participants’ rights to healthcare coverage, portability, and continued group health plan coverage under COBRA.  
• ESBA Notice 2020-1, extending deadlines for plan officials to furnish benefit statements, annual funding notices, and other notices and disclosures required by ERISA, so long as they make a good faith effort to furnish the documents as soon as administratively practicable.  
• FAQs on health and retirement benefit issues to help employee benefit plan participants and beneficiaries, plan sponsors, and employers impacted by the coronavirus outbreak understand their rights and responsibilities under ERISA.

New IRS, SBA, JCT Guidance

April 28, 2020 – In case you missed it, the IRS, Small Business Administration, and Joint Committee on Taxation have issued guidance that may be of interest.

Filing Deadlines.  Last week the IRS issued an updated set of frequently asked questions about the tax filing and payment deadlines. These FAQs supersede those released on March 24 and incorporate additional tax filing relief provided in Notice 2020-23, issued on April 9.

“Retail Glitch.”  Earlier this month the IRS released Rev. Proc. 2020-25, which provides guidance for taxpayers regarding the technical correction to the “retail glitch” under the Tax Cuts and Jobs Act. The technical correction was enacted as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Rev. Proc. 2020-25 allows a taxpayer to change its depreciation under section 168 of the Internal Revenue Code for qualified improvement property placed in service by the taxpayer after December 31, 2017, in its taxable year ending in 2018, 2019 or 2020.  Taxpayers may also make a late election, or revoke or withdraw section 168(g)(7), (k)(5), (k)(7), or (k)(10) for its 2018 taxable year, 2019 taxable year, or 2020 taxable year.

Seasonal Employers. The Small Business Administration and the Treasury Department have issued an interim final rule allowing seasonal employers to use an alternative base period to calculate loan amount eligibility under the Paycheck Protection Program (PPP). SBA and Treasury said the alternative base period is necessary to ensure that summer seasonal businesses can obtain funding under the PPP.

SBA and Treasury explained:

Without the ability to use an alternative base period, many summer seasonal businesses would be unable to obtain funding on terms commensurate with those available to winter and spring seasonal businesses. This interim final rule addresses that disparity and ensures consistency in program administration by providing a seasonal employer the option of using any consecutive 12-week period between May 1, 2019 and September 15, 2019 for determining its maximum loan amount.

Additional PPP Guidance.  The SBA and the Department of Treasury have continued to update guidance regarding the PPP, including clarifying that agricultural cooperatives, farmers, and ranchers are eligible for the program if they meet certain requirements. See Questions 32-35 for issues pertaining to agriculture in the updated FAQ.  Additionally, questions have been raised about whether a producer can utilize a schedule F when applying for assistance. The FAQ guidance addresses this question in number 3.  As reported earlier, farmer cooperatives that meet the size criteria are eligible for this program (generally under 500 employees, but possibly larger under SBA’s NAICS codes). 

CARES Act Tax Provisions. The Joint Committee on Taxation released a description of the tax provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136.

Statement by NCFC President Chuck Conner on Meat Processing and Defense Production Act

April 28, 2020 – “NCFC would like to commend the Trump Administration for invoking the Defense Production Act (DPA) to keep meat processing facilities across the country open during this crisis. Protecting our country’s food supply is a key national security issue—making sure Americans have access to enough food has been a priority of our government since the founding. The situation faced by meat processors is unprecedented and without action today, there is a very real threat of severe disruptions to the food supply chain. In addition, inaction will have impacts far into the future, as the inability to sell the animals they have raised and fed threatens the financial viability of farmers and ranchers across the U.S.” 

View the full news release at: http://ncfc.org/press-release/statement-ncfc-president-chuck-conner-meat-processing-defense-production-act/

Overview of President Trump’s Executive Order Limiting Immigration

April 28, 2020 – Last week, President Trump signed an executive order limiting immigration into the United States effective 11:59 p.m. EDT on April 23, 2020, titled “Proclamation Suspending Entry of Immigrants Who Present Risk to the U.S. Labor Market During the Economic Recovery Following the COVID-19 Outbreak.” After the initial tweet by President Trump announcing the forthcoming order, many questions were raised particularly whether this order would negatively impact H-2A workers and other agricultural guest workers. While it took several days for the text of the Executive Order to be publicly released, Secretary of Agriculture, Sonny Perdue quickly tweeted that H-2A agricultural guest workers would not be impacted by the executive order.

The Executive Order only applies to individuals:

• who are outside the United States on the effective date of this proclamation;
• do not have an immigrant visa that is valid on the effective date of this proclamation; and
• do not have an official travel document other than a visa that is valid on the effective date or issued on any date thereafter that permits him or her to travel to the United States and seek entry or admission.

The Executive Order explicitly excludes:

• any lawful permanent resident of the United States;
• any alien seeking to enter the United States on an immigrant visa as a physician, nurse, or other healthcare professional; to perform medical research or other research intended to combat the spread of COVID-19; or to perform work essential to combating, recovering from, or otherwise alleviating the effects of the COVID-19 outbreak, as determined by the Secretary of State, the Secretary of Homeland Security, or their respective designees;  and any spouse and unmarried children under 21 years old of any such alien who are accompanying or following to join the alien;
• any alien applying for a visa to enter the United States pursuant to the EB-5 Immigrant Investor Program;
• any alien who is the spouse of a United States citizen;
• any alien who is under 21 years old and is the child of a United States citizen, or who is a prospective adoptee seeking to enter the United States pursuant to the IR-4 or IH-4 visa classifications;
• any alien whose entry would further important United States law enforcement objectives, as determined by the Secretary of State, the Secretary of Homeland Security, or their respective designees, based on a recommendation of the Attorney General or his designee;
• any member of the United States Armed Forces and any spouse and children of a member of the United States Armed Forces;
• any alien seeking to enter the United States pursuant to a Special Immigrant Visa in the SI or SQ classification, subject to such conditions as the Secretary of State may impose, and any spouse and children of any such individual; or any alien whose entry would be in the national interest, as determined by the Secretary of State, the Secretary of Homeland Security, or their respective designees.

While the order does not explicitly exclude H-2A and other agricultural guest workers, these workers would fall into the category “or to perform work essential to combating, recovering from, or otherwise alleviating the effects of the COVID-19 outbreak.”

This limitation on immigration will expire 60 days from its effective date and may be continued as necessary. However, within 30 days of the effective date, the Secretary of Labor and the Secretary of Homeland Security, in consultation with the Secretary of State, will review nonimmigrant programs and recommend other measures appropriate to stimulate the United States economy and ensure the prioritization, hiring, and employment of United States workers.

We are very pleased to see the Administration recognize the importance of agricultural guest workers, however, we must remain vigilant in our communications with the Administration about the importance of this workforce to ensure H-2A and other agricultural workers continue to remain excluded from this halt on immigration after the 30 day review period.

SBA Payroll Protection Program (PPP) Re-opens Monday

April 26, 2020 – On Friday, President Trump signed the Paycheck Protection Program and Health Care Enhancement Act, which provides an additional $320 billion in PPP funding. The previous $349 billion was exhausted within two weeks of the program initially being rolled out. SBA will resume accepting PPP loan applications on Monday, April 27 at 10:30 a.m. EST.

The SBA and the Department of Treasury have continued to update guidance of the PPP, including clarifying that agricultural cooperatives, farmers, and ranchers are eligible for the program if they meet certain requirements. See Questions 32-35 for issues pertaining to agriculture in the updated FAQ.

Additionally, questions have been raised about whether a producer can utilize a schedule F when applying for assistance. The FAQ guidance addresses this question in number 3.

As we reported earlier, farmer cooperatives that meet the size criteria are eligible for this program (generally under 500 employees, but possibly larger under SBA’s NAICS codes). 

The legislation also provides for an additional $60 billion for SBA’s Economic Injury Disaster Loan (EIDL) program.  Details of that program can be found on SBA’s website. 

For more information on SBA programs, please contact NCFC Staff Marlis Carson (mcarson@ncfc.org) or Kevin Natz (knatz@ncfc.org).

Farmer Co-ops Urge Administration to Exempt H-2A and Ag Guest Workers in Executive Order

April 21, 2020 – The National Council of Farmer Cooperatives (NCFC) today sent a letter to Secretary of Agriculture Sonny Perdue urging that any Executive Order from President Trump on restricting immigration to the United States due to the COVID-19 pandemic exempt H-2A workers and any other holders of non-immigrant visas who work in the agricultural production chain.

Farmer Co-ops Urge Attention to Farmer Mental Health Issues During COVID-19 Pandemic

April 20, 2020 – The National Council of Farmer Cooperatives (NCFC) today sent a letter to Secretary of Agriculture Sonny Perdue praising the U.S. Department of Agriculture’s (USDA) response to the COVID-19 pandemic and urging him to broaden that response by focusing on the impact the crisis is having on the mental health of producers around the country.

View the full news release at: http://ncfc.org/press-release/farmer-co-ops-urge-attention-farmer-mental-health-issues-covid-19-pandemic/

USDA Announces Relief Plan for Producers, Including Purchases

April 18, 2020 – The U.S. Department of Agriculture (USDA) yesterday evening announced the $19 billion Coronavirus Food assistance Program (CFAP) to provide relief to farmers and ranchers as a result of the COVID-19 pandemic.  The program will include two key efforts:

• $16 billion in direct payments for farmers and ranchers, funded using $9.5 billion emergency program included in the CARES Act and $6.5 billion in Credit Commodity Corporation (CCC) funding. This will fully deplete the CCC until July when additional Coronavirus Aid, Relief, and Economic Security (CARES) Act funding is made available. More information below.
• $3 billion in purchases of agriculture products, including meat, dairy and produce to support producers and provide food to those in need. USDA will work with local food and regional distributors to deliver food to food banks, as well as community and faith-based organizations to provide food to those in need. USDA expects to release a Notice of Funds Available (NOFA) as soon as possible with purchases for dairy, specialty crops and meats beginning in the next three-four weeks.

Direct Assistance for Farmers and Ranchers 

USDA will provide $16 billion in direct payments to farmers and ranchers including:

• $9.6 billion for the livestock industry
  • $5.1 billion for cattle
  • $2.9 billion for dairy
  • $1.6 billion for hogs
• $3.9 billion for row crop producers
• $2.1 billion for specialty crops producers
• $500 million for others crops

Producers will receive a single payment determined using two calculations:

• Price losses that occurred in the first quarter of this year. Producers will be compensated for 85% of price loss during that period.
• Qualified commodities must have experienced a 5% price decrease during the first quarter of the year.

Additional payments will be made for the second quarter. The payment limit is $125,000 per commodity with an overall limit of $250,000 per individual or entity.

All further details on the payment calculation and sign-up date are subject to a final rule, which is expected to be posted in May. There will be no opportunity for public comment on the rule as it will be a direct to final.

Agriculture Secretary Sonny Perdue has said it is his intention that payments be delivered by the end of May/early June.

The CCC will have $14 billion available for additional assistance that is accessible in July, as stipulated in the CARES Act.

NCFC will continue to engage with USDA on the specifics of the final rule and provide additional details as they become available.

White House announces guidelines for reopening the country, announces members of congressional advisory group

April 16, 2020 – The White House released the attached “Guidelines for Opening Up America Again” which proposes a phased approach for reopening states or counties following the coronavirus pandemic.

President Trump also announced the formation of a congressional group to work with the White House on reopening the United States.

A White House news release that lists the members of the “Opening Up America Again Congressional Group” follows.

The news release also is available online at: https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-convenes-members-congress-serve-opening-america-congressional-group/

DHS and USDA Release Additional Flexibility for H-2A

April 15, 2020 – Today the Department of Homeland Security and the U.S. Department of Agriculture announced a temporary final rule to change certain H-2A requirements to help U.S. agricultural employers avoid disruptions in light of COVID-19. These changes should help utilize H-2A workers already in the U.S. and help employers obtain H-2A workers in a more timely and efficient manner.

This temporary final rule, which is effective immediately once posted to the Federal Register, has two main components:

• The first is for H-2A employers with a valid temporary labor certification and are concerned that workers will be unable to enter the country due to travel restrictions. Employers can start employing certain H-2A workers who are currently in the United States immediately after the United States Citizenship and Immigration Services (USCIS) receives the H-2A petition, but no earlier than the start date of employment listed on the petition.
• Second, USCIS is temporarily amending its regulations to allow H-2A workers to stay beyond the three-year maximum allowable period of stay in the United States. Agricultural employers should utilize this streamlined process if they are concerned with their ability to bring in the H-2A workers who were previously authorized to work for the employer.

We will not know the specific details of the new requirements and amended process until the temporary final rule is released, but this certainly will help simplify and streamline the H-2A process during the COVID-19 national emergency. Below is the announcement from USDA with additional information for your reference.

Federal Reserve issues FAQs about Paycheck Protection Program Liquidity Facility

April 15, 2020 – The Federal Reserve released a set of frequently asked questions about its Paycheck Protection Program Liquidity Facility (PPPLF) today.  The PPPLF was established to bolster the effectiveness of the Paycheck Protection Program by supplying liquidity to participating financial institutions.

The FAQs are available at:  https://www.frbdiscountwindow.org/pages/general-information/faq#list-item-1

SBA, Treasury release PPP guidance for individuals with self-employment income

April 14, 2020 – The Small Business Administration and the Treasury Department issued an interim final rule today that supplements an earlier interim final rule establishing the Paycheck Protection Program (PPP) under sections 1102 and 1106 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

SBA and Treasury said that today’s interim final rule provides guidance for individuals with self-employment income who file a Form 1040, Schedule C.  It also addresses eligibility issues for certain business concerns and requirements for certain pledges of PPP loans.

A copy of the interim final rule is attached.  It also is available online at:  https://home.treasury.gov/system/files/136/Interim-Final-Rule-Additional-Eligibility-Criteria-and-Requirements-for-Certain-Pledges-of-Loans.pdf

USDA Unveils Tool to Help Rural Communities Address the COVID-19 Pandemic

April 13, 2020 – U.S. Secretary of Agriculture Sonny Perdue today unveiled a one-stop-shop of federal programs that can be used by rural communities, organizations and individuals impacted by the COVID-19 pandemic. The COVID-19 Federal Rural Resource Guide (PDF, 349 KB) is a first-of-its-kind resource for rural leaders looking for federal funding and partnership opportunities to help address this pandemic.

“Under the leadership of President Trump, USDA is committed to being a strong partner to rural communities preparing for and impacted by COVID-19,” Perdue said. “This resource guide will help our rural leaders, whether they are in agriculture, education, health care or any other leadership capacity, understand what federal assistance is available for their communities during this unprecedented time.”

USDA has taken many immediate actions to assist farmers, ranchers, producers, rural communities, and rural-based businesses and organizations impacted by the COVID-19 pandemic. For more information on these actions, visit www.usda.gov/coronavirus.

IRS issues FAQs on employer payroll tax deferral under CARES

April 10, 2020 – The Internal Revenue Service issued the attached frequently asked questions (FAQs) today regarding provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act that allows employers to defer the deposit and payment of the employer’s share of social security taxes and self-employed individuals to defer payment of certain self-employment taxes.  

The FAQs also are available online at: https://www.irs.gov/newsroom/deferral-of-employment-tax-deposits-and-payments-through-december-31-2020

IRS said it will update the FAQs to address additional questions as they arise.

DOL Releases Third Round of COVID-19 Guidance on H-2A

April 9, 2020 – The Department of Labor (DOL) Office of Foreign Labor Certification has issued a third round of COVID-19 related H-2A frequently asked questions. The Round 3 FAQs address potential issues related to COVID-19 and includes guidance for employers. The first and second rounds of DOL guidance can be found at the links listed below.

Round 1 FAQs – Released March 20, 2020

Round 2 FAQs – Released April 1, 2020

Further Clarification on the Payroll Protection Program and Announcement of New Treasury Lending Programs

April 9, 2020 – The U.S. Department of Agriculture (USDA) updated their website to include “frequently asked questions” regarding the Small Business Administration’s (SBA) Payroll Protection Program (PPP). See also here with relevant section highlighted. Applicants to the program can direct lenders to the USDA website should they question if a farmer co-op is eligible. SBA also released their interim final rule implementing PPP, which can be found by clicking here. Contact NCFC Staff Kevin Natz (knatz@ncfc.org) with questions regarding SBA relief programs.

Additionally, the Treasury Department and the Federal Reserve Board announced the establishment of three new lending programs today:  a Main Street Lending Program, Municipal Liquidity Facility (MLF), and a facility to provide term financing backed by the Paycheck Protection Program loans.  

Treasury will use funds appropriated under the Coronavirus Aid, Relief, and Economic Security (CARES) Act to make a $75 billion equity investment in a special purpose vehicle established to implement the Main Street Business Lending Program. This investment will enable up to $600 billion in new financing for businesses with up to 10,000 employees or $2.5 billion in 2019 annual revenues. Also using funds appropriated from the CARES Act, Treasury will make a $35 billion equity investment in the MLF, which will provide up to $500 billion in direct financing to states, counties, and cities.

In addition to those three new facilities, Treasury and the Federal Reserve also expanded the size and scope of existing facilities already established under section 13(3) of the Federal Reserve Act.  Using funds from the CARES Act, Treasury approved a $75 billion equity investment in a special purpose vehicle established to implement the Primary and Secondary Corporate Credit Facilities (PMCCF and SMCCF), which will be used to purchase eligible corporate debt.  In combination, the PMCCF and SMCCF will provide $750 billion in additional liquidity. Treasury also approved the expansion of the Term Asset-Backed Securities Loan Facility (TALF) to include highly rated newly issued collateralized loan obligations and legacy commercial mortgage-backed securities as eligible collateral.  Treasury had previously announced a $10 billion equity investment in a special purpose vehicle established to implement TALF, which is expected to provide up to $100 billion of loans.

The Treasury news release is available online at:  https://home.treasury.gov/news/press-releases/sm968

The online version of the Federal Reserve news release, which includes links for term sheets for the programs, is available at: https://www.federalreserve.gov/newsevents/pressreleases/monetary20200409a.htm

PPP Applications for Cooperatives

April 8, 2020 – The Problem:  We’ve heard from several NCFC members and other trade associations that there is a problem with co-op applications for the Paycheck Protection Program.  The PPP Loan application requires applicants to list all owners of 20 percent or more of the equity of the Applicant.  Some lenders have concluded that cooperatives do not qualify for the program because they do not have an owner with an ownership interest of greater than 20 percent and the SBA will not let the application process proceed without that information. 

Here is the relevant portion of the application:

The Solution:  According to those familiar with the process, one solution is to list the name of the cooperative in answer to the 20 percent ownership question.  This solution seems to have worked in successfully submitting some applications to the SBA.

We have also heard that SBA is pushing banks to break down 50 percent of ownership of the cooperative and confirm whether any entities within the cooperative structure have utilized SBA loans.  We will be communicating these issues to SBA and USDA.

As a reminder, the Small Business Administration and the Treasury Department issued set of frequently asked questions (FAQs) about the Paycheck Protection Program.  These FAQs also are available at: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequenty-Asked-Questions.pdf     Additional Treasury materials related to the program are available at:  https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses  

Materials from the April 6 NCFC webinar on the PPP program are available at http://ncfc.org/wp-content/uploads/2020/04/NCFC_PaycheckProtectionProgram_Webinar.pdf.  A recording of the webinar is available at https://youtu.be/j029F5iOYYY. 

Farmer Co-ops Urge Support for Farmers Who Grow All Forms of Fruits and Vegetables

April 7, 2020 – The National Council of Farmer Cooperatives (NCFC) urged that the U.S. Department of Agriculture’s response to the COVID-19 pandemic support all producers of fruits and vegetables in efforts to offset economic impacts to the specialty crop sector. The call came in a letter that the organization sent to Secretary of Agriculture Sonny Perdue.

Updated FAQs on the PPP Program

April 7, 2020 – The Small Business Administration and the Treasury Department issued an updated set of frequently asked questions (FAQs) about the Paycheck Protection Program.  These FAQs also are available at: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequenty-Asked-Questions.pdf

Additional Treasury materials related to the program are available at:  https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses  

As a reminder, materials from the April 6 NCFC webinar on the PPP program are available at: http://ncfc.org/wp-content/uploads/2020/04/NCFC_PaycheckProtectionProgram_Webinar.pdf.  A recording of the webinar is available at: https://youtu.be/j029F5iOYYY. 

NCFC Webinar: SBA’s Paycheck Protection Program and Farmer Co-ops

April 6, 2020 – This webinar features an overview of the Paycheck Protection Program by Jeffrey Scheer of Bond Schoeneck & King and Levi Smith of Fredrikson & Byron. Brian Cavey of CoBank will give a lender perspective. Ken Logsdon (Dorsey), Dan Mott (Fredrikson & Byron), Dave Swanson (Dorsey) and Charlie Sullivan (Bond Schoeneck & King) were also on hand to field questions. Download the presentation at: http://ncfc.org/wp-content/uploads/2020/04/NCFC_PaycheckProtectionProgram_Webinar.pdf

Labor Releases Updated Q&As Regarding Paid Sick and Family Leave Provisions of Families First Coronavirus Response Act

April 3, 2020 – The Labor Department has updated its questions and answers regarding the paid sick and family leave provisions of the Families First Coronavirus Response Act.

The Labor Department has been periodically updating its Q&As.  Its initial guidance issued on March 24 included 14 questions and answers.  

The latest iteration includes 79 Q&As. The latest version of the Q&As can be found here: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions

SBA and Treasury Release Updated Forms Regarding Paycheck Protection Program

April 3, 2020 – Late yesterday, the Small Business Administration and the Treasury Department released an interim final rule and other materials regarding their Paycheck Protection Program.  Since then, the SBA and the Treasury Department have released updated forms:

• a final borrower application form is available at: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf
• a lender electronic data form is available at: https://home.treasury.gov/system/files/136/PPP-Lender-Application-Form-Fillable.pdf

CARES Act:  SBA Payroll Protection Program (PPP) & Economic Injury Disaster Loans (EIDL)

April 2, 2020 – The Small Business Administration (SBA) and the Department of Treasury have begun releasing the information that will guide the programs created through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Farmer cooperatives that meet the size criteria under these programs (generally under 500 employees for PPP) are eligible under both PPP and the EIDL program.

There was some initial confusion and uncertainty around whether SBA was going to make cooperatives eligible for PPP. However, after bringing the issue to the attention of senior leadership at USDA, we received confirmation through the Department today that farmer cooperatives are eligible. Linked here is a letter to USDA and the Small Business Administration thanking them for action in ensuring that co-ops can access these programs.

Payroll Protection Program: Established under the CARES Act, PPP provides $349 billion for small business loans to cover qualified payroll costs, rent, utilities, and interest on mortgage and other debt obligations. The loan amounts will be forgiven as long as:

• The loan proceeds are used to cover payroll costs and most mortgage interest, rent, and utility costs over the 8-week period after the loan is made; and
• Employee and compensation levels are maintained.

A fact sheet explaining PPP can be found here:  https://home.treasury.gov/system/files/136/PPP–Fact-Sheet.pdf

To obtain a loan, a qualifying small business should apply through an SBA- and Treasury- approved bank, Farm Credit institution, credit union, or nonbank lender. Treasury has indicated that applicants can begin obtaining loans from participating lenders as soon as Friday, April 3, 2020. To apply, borrowers must complete the application and submit payroll documentation. The application can be found here:  https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf

Economic Injury Disaster Loan Program: The SBA’s EIDL program provides small businesses with working capital loans of up to $2 million that can provide economic support to small businesses to help overcome the temporary loss of revenue. EIDL loans may be used to pay fixed debts, payroll, accounts payable and other costs, but are not intended to replace lost sales or profits and cannot be used for certain purposes, including to refinance debt, make payments on loans owed by another federal agency, to pay tax penalty obligations, or repair physical damages.

In response to the COVID-19 pandemic, small business owners are eligible to apply for an EIDL advance of up to $10,000. The loan advance will provide relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application, and this loan advance will not have to be repaid, even if the loan is not approved, or even if approved and not taken. For EIDLs, borrowers apply directly to SBA. SBA’s website contains further information and an online application: https://www.sba.gov/page/disaster-loan-applications#section-header-0

Because SBA does not have much experience processing EIDL applications from cooperatives, the National Cooperative Business Association hosted a webinar with SBA to discuss how cooperatives should complete EIDL applications. The webinar, “Demystifying SBA’s Economic Injury Disaster Loans,” can be viewed at:  https://www.youtube.com/watch?v=9KjJCHcfpWg

For more information on SBA programs, please contact NCFC Staff Kevin Natz.

Guidance on implementing new paid sick and family leave requirements

April 1, 2020 – The Labor Department today issued a temporary regulation  implementing emergency paid sick leave and family leave under the Families First Coronavirus Response Act. The temporary regulation is effective from April 1, 2020, to December 31, 2020.

In addition, Treasury and IRS released a set of frequently asked questions (FAQs) providing additional information to small- and mid-sized employers on refundable tax credits that reimburse them for the cost of providing paid sick and family leave as a result of the coronavirus.

The Families First Coronavirus Response Act (FFCRA), enacted on March 18, gives businesses with fewer than 500 employees funds to provide employees with paid sick leave and family and medical leave related to COVID-19.

DOL Releases Second Round of COVID-19 Guidance on H-2A

April 1, 2020 – The Department of Labor (DOL) Office of Foreign Labor Certification has issued a second round of COVID-19 related H-2A frequently asked questions. The Round 2 FAQs address potential issues related to COVID-19 and includes guidance for employers.

The first round of DOL guidance released on March 20, 2020 can be found here.

Farm Groups Urge SBA to Clarify Guidance on Ag Business Eligibility

April 1, 2020 – NCFC joined with 30 other agricultural groups in sending a letter to the Small Business Administration (SBA) asking the agency to clarify that agricultural producers and businesses are eligible to participate in the Economic Injury Disaster Loan (EIDL) program as modified in the recently-passed pandemic relief legislation, the CARES Act.

Earlier this week, the SBA posted information that stated that applicants to the loan fund must certify that they are not an “agricultural enterprise (e.g., farm) other than an aquaculture enterprise, agricultural cooperative or nursery.” However, the letter notes that in no part of the legislation does it exclude farms, ranches and other farm operations from the program.

The groups ask the SBA to follow the clear statutory language of the CARES Act and change the language on the EIDL web site to reflect that all farm businesses are eligible for the program.

New Tax Benefits; Resources for Tax Filings, Benefits, SBA, Unemployment

March 31, 2020 – Following is an overview of new tax provisions that may be utilized by cooperatives; links to tax filing resources; and information on SBA loan availability and unemployment benefit guidance.

Provisions in the tax relief bill signed by President Trump on March 27:

Net operating losses. The 2017 Tax Cuts and Jobs Act (TCJA) eliminated net operating loss (NOL) carrybacks and restricted the deduction of NOLs to 80 percent of taxable income. The new law allows a five-year NOL carry back for losses incurred in tax years beginning in 2018, 2019 and 2020.

For taxable years beginning before 2021, taxpayers can deduct 100% of loss carry forwards and carry backs. For taxable years beginning after 2020, taxpayers can deduct 100 percent of loss carry forwards from years beginning before 2018.  However, loss carry forwards from years beginning after 2017 would remain subject to the 80 percent of taxable income limitation.

Interest limitation. Under the TCJA, the deduction for net business interest expense is limited to 30 percent of adjusted taxable income (ATI). Under the new law, (is) the limitation would be increased to 50 percent (rather than 30 percent) of ATI for taxable years beginning in 2019 and 2020; and (ii) for taxable years beginning in 2020, the taxpayer would be able to determine its interest limitation by using its ATI from 2019 (rather than 2020).

With respect to the increased 50 percent limitation, the new law (i) provides the ability to elect out of the increased limitation for any taxable year beginning in 2019 and 2020, and (ii) provides that the increased limitation does not apply to a partnership with respect to a taxable year beginning in 2019, but a partner who has excess business interest allocated to it from the partnership for a taxable year beginning in 2019 can (unless the partner elects otherwise) treat 50 percent of the interest as business interest in the partner’s first taxable year beginning in 2020 that is not subject to the 163(j) limitation (with the remaining 50 percent of such excess business interest treated as subject to the 163(j) limitation).

With regards to the election to use 2019 ATI, the bill provides that (i) in the case of a partnership, such election shall be made at the partnership level, and (ii) if such election is made for a taxable year that is a short year, the 2019 ATI for the short taxable year is adjusted on a pro rata basis to reflect the number of months in the short taxable year.

Note:  On December 17, 2019, Treasury and IRS submitted final regulations regarding the business interest limitation under section 163(j) for review by the White House Office of Management and Budget.  Prior to the COVID-19 crisis, those regulations were expected any day. NCFC submitted comments on the proposed regulations making the case that cooperatives should be allowed to add back patronage dividends when making the ATI calculation (thus increasing the deduction).  We are hopeful that Treasury/IRS will implement that suggestion in the final regulations.  (Alternatively, farmer cooperatives may elect to be exempt from the interest limitation in exchange for using a ten-year depreciation system.)

Acceleration of AMT credits. The TCJA repealed the corporate alternative minimum tax (AMT) and allowed taxpayers the use of all remaining AMT credits over a four-year period beginning in 2018. The bill accelerates the use of remaining AMT credits by allowing taxpayers to apply the entire refundable credit amount in tax years beginning in 2018 and 2019. Taxpayers may make an election to take the entire refundable credit amount in 2018. The provision also provides that any application for refund of an amount pursuant to such election is subject to section 6411 “quickie” refund provisions with no review by the Joint Committee on Taxation and any such claims for refund should be processed within 90 days of the date the claim is filed.

Qualified improvement property. The bill includes a technical correction treating “qualified improvement property” as 15-year property. As a result, such property is eligible for immediate expensing. This bill also provides QIP a class life of 20 years for purposes of ADS. This provision is effective as if originally included in the TCJA.

Increase of charitable contribution limitation.  For charitable contributions paid in cash in 2020, the bill increases the percentage income limitation for corporations (from 10 percent) to 25 percent of taxable income. The limitation on business contributions of food inventory is increased to 25 percent (from 15 percent).

Exclusion for employer payments of student loans. The new law excludes from gross income amounts up to $5,250 paid by an employer to an employee for the principal or interest on a qualified education loan. This provision applies to payments made after enactment of the bill and before January 1, 2021. The employer may either directly pay the employee or the lender.

Single-employer plan funding relief. The new law delays the due date for any contribution otherwise due under section 430(j) during 2020 until January 1, 2021. At that time, contributions that had been due earlier would be paid with interest (effective rate of interest for the plan) during the delay. In addition, a plan sponsor may elect to determine the applicability of benefit restrictions for the 2020 plan year based on the plan’s funded status for the 2019 plan year to avoid restrictions due to declining returns.

Employee Retention Credit. Employers can receive a refundable credit for up to 50 percent of qualified wages for each calendar quarter. The maximum amount of qualified wages per employee that may be taken into account for all calendar quarters is $10,000.

The credit is first allowed against the tax imposed by section 3111(a) or 3221(a), and then any credit in excess of such payroll tax liability will be treated as an overpayment and refunded to the eligible employer under sections 6402(a) and 6413(b). The payroll tax trust funds are held harmless under this provision through a transfer from the general fund.

An eligible employer means an employer (other than an employer receiving a business interruption loan) that conducted an active trade or business during calendar year 2020 and with respect to that business:

1. The operation of that business was fully or partially suspended by governmental order due to the coronavirus (COVID-19) during such calendar quarter; or
2. The calendar quarter is within a defined period in which such business has experienced a significant decline in gross receipts.

The defined period runs from the first calendar quarter beginning after 2019 in which the business has suffered a more than 50% drop in gross receipts as compared to the same calendar quarter for the prior year, to the first subsequent calendar quarter in which the business’s gross receipts are at least 80% as compared to the same calendar quarter for the prior year.

“Qualified wages” differ based on the size of the employer.  Persons treated as a single employer under section 52(a) or (b) (relating to the work opportunity tax credit) or section 414(m) or (o) (relating to certain employee benefit plans) are treated as a single employer for purposes of the credit. The provision applies to wages paid after March 12, 2020 and before December 31, 2020.

Deferral of certain payroll taxes. An employer’s share of social security taxes from the effective date through the remainder of 2020 is deferred and is due 50% on December 31, 2021 and 50% on December 31, 2022, with no interest or penalties.

Other tax priorities:

Section 199A proposed regulations.  The proposed regulations under section 199A are at IRS/Treasury for final review.  Because the Administration is focused on getting relief to taxpayers, it is doubtful that approving the proposed regulations is a priority at this time.  We are monitoring when guidance is sent to OIRA and are also in contact with other ag-related groups to keep them informed.  We will provide updates on the progress of the regulations. 

Tax filing resources:

• The IRS has a webpage dedicated to the tax deadline and other information regarding tax compliance during the COVID-19 crisis.  The information includes a set of frequently asked questions (FAQs) regarding the special Federal income tax filing and payment relief that was provided under Notice 2020-18.  The FAQs can be viewed here.
• The AICPA is tracking state-by-state tax filing due date relief. 
• The Congressional Research Service has issued a report on the tax stimulus package: The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief for Individuals and Businesses

USDA, Small Business Administration resources:

• USDA Rural Development has launched a COVID-19 resource page to provide updates on actions taken by the Agency to help rural residents, businesses, and communities impacted by the COVID-19 outbreak, including payment assistance, application deadline extensions, and more.
• The Small Business Administration’s Economic Injury Disaster Loan program provides small businesses with working capital loans.  Cooperatives with up to 500 employees that meet size guidelines are eligible.  Funds will be made available within three days of a successful application, and this loan advance will not have to be repaid. To apply for a COVID-19 Economic Injury Disaster Loan, click here.

Unemployment benefit resources: The federal government is allowing new options for states to amend their laws to provide unemployment insurance benefits related to COVID-19. For example, federal law allows states to pay benefits where:

• An employer temporarily ceases operations due to COVID-19, preventing employees from coming to work;
• An individual is quarantined with the expectation of returning to work after the quarantine is over; and
• An individual leaves employment due to a risk of exposure or infection or to care for a family member.

In addition, federal law does not require an employee to quit in order to receive benefits due to the impact of COVID-19. Click here for more information, including links to state-specific resources.

Legal, Tax & Accounting Resources

Many law firms and accounting firms that work with NCFC members are providing useful information for dealing with COVID-19 issues.  Here are links to related websites.

Legal:
Bond, Schoeneck & King
Dorsey & Whitney LLP
Fredrikson & Byron
HansonBridgett
Loeb & Loeb
McDermott Will & Emery
Porter Wright Proskauer
Shipman & Goodwin LLP

Tax & Accounting:
Baker Tilly
BDO
BerganKDV
Blue & Co., LLC
CLA
Crowe
Deloitte
EY
Grant Thornton
Herbein + Company
KPMG
Moss Adams
PWC

Additional Resources

March 27, 2020 – The Treasury Department and the Internal Revenue Service issued the following notice regarding the effective dates for the employment tax credits under the Families First Coronavirus Relief Act: https://www.irs.gov/pub/irs-drop/n-20-21.pdf

Notice 2020-21 said, “This notice provides that the tax credits for qualified sick leave wages and qualified family leave wages required to be paid by the Families First Coronavirus Response Act will apply to wages paid for the period beginning on April 1, 2020, and ending on December 31, 2020. This notice also provides that days occurring during the period beginning on April 1, 2020, and ending on December 31, 2020, will be taken into account for credits for qualified sick leave equivalent amounts and qualified family leave equivalent amounts for certain self-employed individuals.”

NCFC Human Resources Poll Regarding COVID-19 Leave Policies 

March 27, 2020 – Given the challenges presented by illness and child care during the COVID-19 crisis, an NCFC member asked if cooperatives are offering enhanced leave or financial rewards to employees.  We polled our members and received the responses linked here.  If your cooperative is offering additional incentives or health benefits relating to COVID-19, please reach out to Janet Peterson and we will keep this list updated.

EPA Announces Temporary Policy for Enforcement and Compliance Assurance Program

March 26, 2020 – Earlier today, the Environmental Protection Agency announced a temporary policy on EPA enforcement of environmental legal obligations during the COVID-19 pandemic.

In EPA’s statement about the policy changes, they noted that “the policy does not expect to seek penalties for noncompliance with routine monitoring and reporting obligations that are the result of the COVID-19 pandemic but does expect operators of public water systems to continue to ensure the safety of our drinking water supplies. The policy also describes the steps that regulated facilities should take to qualify for enforcement discretion.”

The policy applies retroactively to March 13, 2020, and the agency will post notification seven days prior to terminating the temporary policy.

For more information on the EPA Policy on Enforcement during the COVID-19 outbreak, got to: https://www.epa.gov/enforcement/enforcement-policy-guidance-publications

Updated Department of Labor Guidance on Families First Coronavirus Response Act

March 26, 2020 – The U.S. Department of Labor has provided updated implementation of the Families First Coronavirus Response Act (FFCRA). The new guidance includes two posters – one for federal workers and one for all other employees – that will fulfill notice requirements for employers obligated to inform employees about their rights under the new law.  In addition, the Wage and Hour Division (WHD) released a questions and answers document about posting requirements, as well as a Field Assistance Bulletin describing WHD’s 30-day non-enforcement policy.

As a reminder, the WHD published its first round of FFCRA implementation guidance on March 24^th:

• Fact Sheet for Employees
• Fact Sheet for Employers
• Questions and Answers

Federal Motor Carrier Safety Administration Issues Waivers and Guidance

March 26, 2020 – Over the past week, the Federal Motor Carrier Safety Administration (FMCSA) of the Department of Transportation (DOT) has been issuing emergency declarations, waivers, and guidance to keep critical products in the supply chain moving by truck. Initially, this included such items such as medical equipment, food and other products to keep store shelves stocked, and was updated last week to include fuel. This week, FMCSA took further action in addressing a number of concerns expressed by NCFC and its members, including:

1. Providing a waiver extending Commercial Drivers Licenses (CDLs) and DOT required medical exams that expire after February 29 to June 30.
2. Issuing guidance which provides flexibility to mandatory random drug and alcohol testing.
3. Expanding relief of hours of service (HOS) limitations to agricultural supplies and a number of commodities, such as fertilizer and feed.  However, we understand they are still reviewing seed at this time and are hopeful FMCSA will publish a more comprehensive list of covered commodities in the future.

Additional information is available on NCFC’s COVID-19 website, including:

1. Farm to Fork Letter to FMCSA
2. FMCSA: Frequently Asked Questions Related to the FMCSA Emergency Declaration
3. U.S. Department of Transportation: Frequently Asked Questions Related to the FMCSA Emergency Declaration
4. FMCSA Expanded Emergency Declaration

You can also refer to FMCSA’s website to find the specific details of those notices and waivers: https://www.fmcsa.dot.gov/COVID-19

Additionally, FMCSA is working with states on issues such as temporary agriculture CDLs and expects to issue guidance soon.

On a call yesterday, while not a requirement, FMCSA suggested that drivers carry a copy of the waiver and Department of Homeland Security CISA’s guidance in the truck.  While FMCSA has not yet heard of disruptions by local authorities, they expressed the importance of notifying them of any such instances.  If your drivers have such a problem, you can alert your local DOT personnel, or contact us to patch you into the FMCSA here in Washington.

If you have any questions or need further information, please contact Kevin Natz. 

IRS Operations During COVID-19: Mission-critical functions continue

March 24, 2020 – The Internal Revenue Service issued a news release that lists its mission-critical functions that continue during the coronavirus outbreak. A copy of the news release can be found at: www.ncfc.org/irs-operations-during-covid-19-mission-critical-functions-continue-internal-revenue-service/ The Internal Revenue Service issued a set of frequently asked questions (FAQs) regarding the special Federal income tax filing and payment relief that was provided under Notice 2020-18. The FAQs can be viewed at:  https://www.irs.gov/newsroom/filing-and-payment-deadlines-questions-and-answers.

Letter to Governors on Essential Workers

March 24, 2020 – NCFC joined with more than 40 other farm and ag groups urging the nation’s governors to adhere to the guidance from the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) on Critical Essential Infrastructure Workers when crafting stay-at-home or business closure orders in response to the pandemic. The letter can be found at www.ncfc.org/letter/letter-governors-essential-workers/.

NCFC Sends Letter to Federal Motor Carrier Safety Administration

Announcement on Border Policy for Ag Workers

Agriculture and Food Supply Chain

March 20, 2020 – As a number of states and localities are fighting the spread of COVID-19 with quarantines, shelter-in-place orders, and travel restrictions, it remains critical that crop inputs, raw commodities and food be produced and be able to move throughout the supply chain to the American consumer. This is especially critical now as planting season approaches and deliveries of fertilizer, seed and crop protectants must be made in a timely manner.

Much of NCFC’s staff time this week has been dedicated to this issue. Many of our members have also taken a lead role in sounding the alarm on this issue. For instance, Beth Ford, CEO of Land O’Lakes, Inc, was interviewed on CNN on the issue, which can be viewed here.

On Thursday, the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) issued guidance identifying “Tier 1 Essential Critical Infrastructure Workers.”  Tier 1 essential workers are those who are necessary to keep systems and assets working to avoid having a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters.

The guidance can be viewed on the CISA web site here. Among the 16 sectors identified as critical is food and agriculture; the workers listed as critical make up the entire food and ag supply chain, from input manufacturing and transportation to producer to processors and retailers.

Statement of NCFC President Chuck Conner on Essential Critical Infrastructure Workers Guidance

The guidance was especially critical as on Thursday, March 19, California Governor Gavin Newsome ordered the state’s residents to shelter in place except for essential services. The California Department of Agriculture noted that the governor’s executive order followed the CISA guidance and exempted food and agriculture workers from the restrictions.

Additionally, it appears based on a list received from the State of Pennsylvania that they too have followed DHS guidance on food and agriculture after Governor Tom Wolf ordered the closing of all “non-life sustaining” stores and businesses.

CISA has an email address to which companies and the public can direct questions; it is  CISA.CAT@cisa.dhs.gov.

H-2A Visa Processing

March 20, 2020 – On Monday, U.S. Embassy in Mexico and all U.S. consulates in Mexico announced that in response to the global COVID-19 pandemic, and in line with the Mexican government’s call to increase social distancing, they will suspend routine immigrant and nonimmigrant visa services starting March 18, 2020, and until further notice. NCFC and the other members of the Agriculture Workforce Coalition (AWC) immediately began outreach after this announcement since March, April and May typically are the peak months for H-2A interviews in Mexico.

USDA also engaged on the issue, and Secretary Sonny Perdue was able to update ag stakeholders on Tuesday. He was able to clarify that the State Department will be prioritizing workers eligible for the in-person interview waiver. He did note that the State Department’s own data show that this process will only cover a portion of the workers needed to help produce this country’s food. Secretary Perdue also announced that USDA had an email address where ag employers could reach out with questions and concerns for the Department to follow up on; it is aglabor@usda.gov. Further updates from USDA will be posted on www.farmers.gov.

In addition, processing of visas is on hold in Jamaica (a major source of workers for apples and other tree fruits) until mid-April, as an embassy employee tested positive for COVID-19 last week.

In response, the AWC steering committee in a letter called on Secretary of State Mike Pompeo to recognize all H-2A as well as any other non-immigrant visa petition involving an agricultural worker visa consular processing functions as essential and direct U.S. Consulates to treat all agricultural worker appointments as emergency visa services.

“We agree that governments and the private sector must take all necessary precautions to reduce further transmission of the virus in our communities, however those steps must be proportional and reasonable,” the groups write. “The Food and Agriculture Sector remains critical at this trying time and must be able to continue to provide sustenance.”

NCFC and the AWC continue to work on ensuring that America’s farmers, ranchers and growers can get the workers they need at this critical time. Keep in an eye for future updates.