A Bill is Introduced to Make Certain USDA Payments Tax-Free to Farmers
Rep. Alma S. Adams (D-N.C.) introduced the Family Farmer and Rancher Tax Fairness Act of 2023 that would make certain USDA payments tax-free to farmers.
The Family Farmer and Rancher Tax Fairness Act of 2023 was just introduced this week; however, this same bill had originally been introduced in the Senate earlier this year by several Democratic Senators.
The bill would make many payments to farmers by USDA tax-free similar to the PPP loan forgiveness. The programs covered by this bill were originally part of the American Rescue Plan of 2021 but were updated by Public Law 117 Section 22006 and 22007.
Section 22006 allocated $3.1 billion to assist farmers who are distressed and have a hard time making their payments on loans to USDA or guaranteed by USDA. This Bill would make any of those payments tax-free. Our concern is that we have heard of several situations where certain farmers are purposely not making payments to get these loans forgiven. If, on top of this, those payments are tax-free, it seems this becomes a double benefit to the farmer.
Section 22007 dealt with several programs as follows:
$125 million to provide outreach, mediation, financial training, etc. for underserved farmers including veterans, beginning farmers and ranchers, and farmers, ranchers and forest landowners in high poverty areas.
$250 million to improve land access for those same type of underserved farmers, ranchers and forest landowners.
$250 million for internships in farming, etc.
$2.2 billion for farmers, ranchers, etc. that have been discriminated against by USDA. That program was released a few months ago by USDA.
Although this sounds good for these farmers not to have these proceeds by taxable, it seems this is a double standard. Other farmers receiving financial assistance from USDA have to pay taxes on those proceeds. Why should these farmers receive tax-free proceeds where others don’t.
These funds are not related to the pandemic, therefore, at least in our opinion, they should remain taxable.
There is a chance that this Act may become part of the new Farm Bill. We will keep you posted.