Congress Passes $2 Trillion COVID-19 Relief Measure

Congress passed a massive $2 trillion COVID-19 aid bill this week. The U.S. Senate approved the measure Wednesday, March 25, followed by U.S. House action on the bill Friday, March 27. Nebraska Farm Bureau President Steve Nelson called the Coronavirus Aid, Relief, and Economic Security (CARES) Act “an important first step” in providing relief to Nebraska farm and ranch families whose operations have been harmed financially by the COVID-19 outbreak. Earlier in the week, Nebraska Farm Bureau sent a letter to members of Nebraska’s Congressional Delegation outlining the organization’s priorities for COVID-19 relief actions. All five members of Nebraska’s Congressional Delegation supported the measure and Nebraska Farm Bureau thanks them for their efforts. The CARES Act was signed by President Trump this afternoon. Overview below for full details.

Watch NEFB’s Bill Review Here

CARES Act Overview

USDA Funding:

  • $14 billion to replenish the Commodity Credit Corporation (CCC) account which has a cap of $30 billion, but was drained to cover the cost of last year’s MFP program.
  • $9.5 billion in direct funds under the discretion of the Secretary (Sec. Perdue) for livestock, specialty crops, local food systems, and dairy.
  • $15.5 billion for the Supplemental Nutrition Assistance Program to cover an expected increase in demand as a result of the pandemic.
  • $8.8 billion for child nutrition programs.
  • $450 million for The Emergency Food Assistance Program, or TEFAP, which funds food distribution to food banks.
  • $100 million for additional rural broadband grants through USDA's ReConnect program.
  • $33 million to the Food Safety and Inspection Service to cover the cost of temporary and intermittent workers, relocation of inspectors and overtime costs.
  • $25 million for the Rural Utilities Service to support telemedicine and distance learning services in rural areas.
  • $4 million to cover the cost of repatriating Foreign Agricultural Service staff.

Tax Provisions:

Farm and Ranch Businesses

  • Modifications for net operating losses (NOL) (Sec. 2303))
    • Businesses will be able to use net operating losses from 2018, 2019 and 2020 to reduce taxes that were paid for the previous five years. The taxable income limitation is lifted to allow the NOL to fully offset income. Currently, net operating losses can only be applied to future tax years except for farming losses that have a two-year carry-back. Businesses with NOLs will be able to refile their taxes for the previous five years and receive tax refunds from recalculated taxes. This infusion of cash will help farm and ranch businesses pay employees and cover operating expenses.
  • Business Interest deduction Increased for larger ag businesses. (Sec. 2306)
    • The amount of business interest that large ag businesses can deduct is increased from 30 percent of taxable income to 50 percent of taxable income for 2019 and 2020. Currently, farm and ranch businesses with gross receipts of $25 million or less are able to fully deduct their business expenses. Increasing the deduction for larger businesses will make it easier for large businesses to purchase needed inputs.

Agriculture Employers

  • Delayed payment of employer payroll taxes (Sec. 2302)
    • Employers will be able to defer the employer share (6.2 percent) of Social Security payroll taxes that would have been due throughout 2020. Self-employed individuals will also be able to defer 6.2 percent of Social Security taxes owed. Half the deferred amount will be due on December 31, 2021, with the other half due on December 31, 2022. The delay in tax payments will allow employers to retain more of their earnings to cover expenses and meet payroll.
  • Tax credits for employee retention (Sec. 2301)
    • Starting March 13 and through 2020, employers are granted credits against payroll taxes for 50 percent of up to $10,000 of wages (including health benefits) per employee. To be eligible, a business had to have partially or fully shut down OR experienced a 50 percent reduction in gross receipts. Calculations are determined quarterly. For employers with more than 100 full-time employees, qualified wages are wages paid to employees when there is a business shutdown. For employers with 100 or fewer employees, employee wages qualify for the credit whether the business is operating or not. If the credit exceeds the amount of payroll taxes owed, a government payment will be issued to the employer. This provision will help employers retain employees and cover payroll when income is reduced or nonexistent.
  • Employer payments for student loans (Sec. 2206)
    • During 2020, employers may provide up to $5,250 annually to an employee for student loan repayment. The employee will not have to pay taxes on the amount.

Individuals

  • Penalties waived for retirement fund withdrawals (Sec. 2202)
    • Individuals will be able to withdraw up to $100,000 from retirement accounts without penalty. Taxes on the withdraw would be payable over three years or individuals have the option to recontribute the sum within three years.
  • No mandatory withdrawals from retirement plans (Sec. 2203)
    • Individuals will not be required to make mandatory withdrawals from retirements accounts in 2020 so that they are not forced to liquidate investments at low values.
  • Deductions for charitable contributions. (Sec. 2204)
    • Individuals will receive a tax benefit for charitable contributions of up to $300 regardless of whether or not they itemize their deductions. The limitation on individual charitable donations by those who itemize does not apply for 2020. The deduction for contributions of food inventory is increased from 15 percent to 25 percent.

Marketing Assistance Loans:

  • The bill also extends the term of marketing assistance loans by an additional three months, from the current limit of nine months.

Other Provisions:

  • A one-time $1,200 check for an individual making up to $75,000 per year or $2,400 for couples earning less than $150,000. After that, it will be scaled down until it reaches a $99,000 income threshold for an individual or $198,000 for a couple and then phased out altogether. It also provides an additional $500 per child.
  • For folks finding themselves unemployed, the bill provides an additional $600 boost in unemployment benefits for four months.
  • A $500 billion corporate liquidity fund to help companies impacted by the coronavirus access credit including $46 billion in direct financial assistance, with $25 billion for U.S. airlines, $4 billion for air cargo carriers and $17 billion for other distressed companies related to critical national security.
  • $100 billion for hospitals including a boost of medical supplies in the Strategic National Stockpile amid reports that the country is facing a shortfall of key items such as ventilators, masks and swabs used for coronavirus testing. It would also require health insurance companies to pay for coronavirus testing and increase funding for community health centers.
  • The bill would also defer payments for federally owned student loans for six months, through Sept. 30.

Revenue Committee Files Property Tax Amendment, Session in Limbo

The Legislature’s Revenue Committee advanced a property tax relief amendment to LB 1106 this week. The proposal would increase state funding by $520 million to Nebraska’s public schools to reduce school districts reliance on local property taxes. Under the measure, state funding would be stepped up over three years as property values for school taxing purposes decrease. Additional details on the amendment to LB 1106 can be found here. At this point there is no set date for when the 2020 legislative session might resume. Thursday, the Mayor of Lincoln announced tightened restrictions in response to COVID-19 spread mandating there can be no gatherings of more than 10 people for any reason in a single space through May 6.

USDA FSA, NRCS Services Available by Phone Appointment Only

Both Nebraska’s USDA Farm Service Agency and Natural Resources Conservation Service announced this week that they are open for business but have moved to phone appointment only for services until further notice. You can read the notices with additional information for each agency here - (FSA), (NRCS). All USDA Service Centers, including those with NRCS field offices, are not currently accessible to customers in person. For the most current updates on available services and Service Center contact information, visit farmers.gov/coronavirus.