Updated Coronavirus Relief Programs for 2020/2021: What's in it for You?

February 15, 2021

Video Transcript

All right, Good afternoon everyone. And once again, thank you for attending the Michigan AG idea to grow with virtual conference today. As we have done all day, I want to make sure that we take just a quick moment to thank our sponsors. They have been well, without their generous support, we would not have been able to offer this conference for free today. And we've also been graciously supported in the fact that we are able to offer a scholarship opportunity to high-school seniors and current college students. And so if you've got someone, you know, that is looking for some a little bit of assistance related to going to college. We want to make sure we promote that to folks. And that is again, courtesy of our sponsors for today's program. And I have put the link that's shown here on the screen in the chat for everyone. And also as part of today, we also want to take a moment and highlight some information for one of our colleagues, Eric her Boesky, who focuses on farm stress. And we actually have a short video of error that we want to play for everybody. I will actually turn that over to hi, my name is Eric carve-out skin. I'm a behavioral health educator with MSU Extension that focuses on farm stress. With your farm stress tip. We know that farm he is a stressful occupation and taking care of your mental health is just as important as your physical health. When it comes to this, there is no one size that fits all, but the eight dimensions of wellness can help provide you with tools that you need to stay energized and find a good life for work-life balance. Those include the eight dimensions of wellness, and those are physical or any form of exercise can relieve stress. Intellectual activities that engage your mind such as reading, journaling, or maybe doing a puzzle can be helpful coping tools, financial or money management, having a plan, what does that look like can help reduce some of those financial stressors. Environmental spending non-work time in nature, green spaces has also been shown to relieve stress. Spiritual or connecting yourself with the world around you if you're not spiritual, this could also be done through meditation. Social, staying connected with your family and your friends are seeking out opportunities to make friends or maybe participating in community events, connecting with people that share similar interests. Occupationally, allowing yourself time to recharge and establish healthy boundaries and work-life balance is important. And finally, emotional detaching yourself from temporary forms of stress using relax, relaxation techniques or reframing your thoughts and participating in different activities that can engage you can be very helpful for reducing or relieving stress. And a number of these resources are available on the MSU Extension farm stress website where you can find more information and materials and resources and know that there are a lot of people working very hard behind the scenes to support you as you support us. Thank you and have a great day. And we certainly appreciate Alex or excuse me, Eric providing that information for us. It's important to note that carrying for crops and animals creates a unique stress and pressure that can be hard on farmers and agribusiness professionals. The caring for one's own health and wellness in what is really a high-stress profession is often overlooked, but it's just as critical as carrying for the foreign business. So what are those stresses come from a financial issue or the stresses are just everyday life. Msu Extension can and wants to help. And if you'd like to learn more about farmer stress, please join us on this Friday, February 19, at 11 AM for the session mending the stress fence. You can find the Zoom link and pass code on the final schedule that was emailed to you. And now this time I want to turn the session over to our main speaker, Dr. Corey Clark. Carly human Corey is a colleague of mine in the farm business team. And Cory, I'm going to turn it over to you to share your slides and introduce yourself. Okay, let's get the slides. I've got the slides. Looks good. All Rights. So yeah, I'm Cory Clark. I am the farm business management educator for MSU Extension in the thumb. And so one of the things I've spent a lot of time on lately is the coronavirus relief programs. In part because there's a lot of them in part because they're not quite the same kinds of programs were used to. And in part because they can be really valuable. So today's talk is Coronavirus Relief Program updates. What's in it for you? Because of course there was a set of for Karina Corona virus relief programs last year. And now with the passage of the bill at the end of 2020, there's updated programs available now. So we'll walk our way through, through those programs there. I think one of the key points is that we're used to programs through FSA and we're used to tax credits through introductions through the IRS and these programs. There's a couple of them that are through the Small Business Administration. And because of that, they look a little different. They were designed for all small businesses and they specifically included agriculture, but they're not the same agricultural programs that were used to. So the first thing I want to do is simple questions. Your current level of knowledge of the coronavirus relief programs. And as of right now, are you planning to apply for any of the coronavirus relief programs? If you take a second and look at the pull, that would be great. Just another second. And we can end the polling, John. Okay, So we have quite a balance here of people that understand the program. Some not very much, and quite a few that you guys are here because, you know, what are these programs and can they benefit me? So we'll cover this stuff. I kind of look at the big picture in because there's a lot of things that don't get talked about as much as maybe they should. And these programs, ways that these programs can benefit more people. Aware or the what's in it for you question applies to their YES is more common. And the people that are familiar with the programs, there might be a few nuggets here that are useful to you as well. Okay, So the agenda, the way we're going to approach this is we're going to look at the relief programs overall, kinda what they are, how they work. We'll talk a little bit about the legislation for us to gauge how does in a perspective. And then have the programs work. And then we'll spend some time on what is it that you need to do. This is their management implications, is their records, lots of records. I will talk about that. And finally, we'll wrap up with some additional resources. Okay? So the overview of the programs. The coronavirus relief legislation started when coronavirus became a thing last year in 2020, towards the beginning of the year. And the Families First Coronavirus Response Act was the first legislation that was passed. And this legislation was kinda specifically designed to benefit families in Tibet, benefit employees. It created sickly mandate is sick leave for certain employers, mostly smaller businesses that had employees that were affected by COVID in some specific ways, including if they had to stay home with kids that do some childcare for kids that were out of school and out of daycare. And it's set up an excuse me, sorry. It also SAP tax credits to pay for the leave that was required to be paid by the employees. One of the provisions that was didn't get as much attention is that owners could get those same tax credits if they were unable to work due to COVID, either from their personal health status standpoint or taking care of somebody impacted by COVID. So that was the first legislation. And then the second legislation was the cares Act, the Coronavirus Aid Relief and Economic Security Act, which this one was created a number of programs to benefit small businesses. And again, the direct payment program or see FAP, which we'll talk about in a minute. Then was designed for agriculture. But the loan programs and the tax credits were designed to help a variety of different small businesses are actually they were open to nearly all small businesses. And we'll talk about them because they are, they are inclusive of agriculture. And then the new legislation, the Consolidated Appropriations Act. This came after six months of wrangling and argument about how this legislation should look. It was passed the very end of 2020, and Just in time to make tax planning or her really difficult to really messy. It was a big big piece of legislation, 5500 pages, half regular appropriations, regular budget type stuff, and then half COVID relief legislation. And it created three different three different acts that updated the programs that the programs of the cares Act had created. There's about 15 different acts in this big Consolidated Appropriations Act. And three of them we'll talk about, although I won't refer to them by these long titles. The first one was the economic aid to hard-hit small businesses, non-profits, and venues Act of 2020. And that one is really called mostly the economic aid Act. This one updated the two loan programs. And then the taxpayer certainty and Disaster Relief Act of 2020. That one impacted the tax credit programs. And then finally the COVID related Tax Relief Act, which extended the sick leave tax credit but didn't, but eliminated the requirement that employers provide that li. We'll talk about all three of those coming up here in a minute. Okay. So three kinds of programs, right? Direct payments program, the corona virus food assistance program that when we get to the like, the alphabet soup stuff is called seep app. That we're not going to cover that today because seep app to was in the middle of there's actually there was two rounds of it already, right? See if App one, which is pretty narrowly targeted to price drops associated with COVID on a pretty narrow set of commodities. And then seep app too, was opened up to a wider variety of commodities in facts, including non traditional commodities, which we did a webinar to explain how that worked for these non-traditional commodities. And then they expanded Safe app to a little bit. And then that became on pause because of the transition between administrations. There will be a CIF app three, it's written into the law, but there are no details available about that are not very many beyond what's in the legislation. So stay tuned. We'll talk about that more when there's there's more to talk about the loan programs. So this is the Paycheck Protection Program or PPP. So we talked a lot about PPP loans, That's the Paycheck Protection Program and the economic injury disaster loans or EIDL loans, or you might hear them referred to as EIDL loans. The letters, you get kind of out of control to be totally honest. And then the tax credits, two of those two major programs, the employee retention tax credits. It applies to all businesses that have employees in a and they have a qualifying economic loss during the COVID, the COVID era. And then the FFCRA employer paid sick leave text credits. This is the one that came with the first law, but the mandate is sick leave was eliminated in the Consolidated Appropriations Act. The tax credit remains. And we'll talk about that a bit as well. So I wanted to have a little bit first about how the programs work before we get to the numbers. And the thing is the programs keep evolving. Things change on a really regular basis. Sometimes every day, sometimes multiple times a day. So this information is current as of today. And but you will ultimately want to work with your professionals. Your lender will be involved in the PPP program. You'll want to work with your lender. You want to work with your tax preparer in addressing all of these and the tax implications of all of them. And specifically, of course, the tax credits then go through with the programs and then what you need. Okay. Paycheck protection program. So for the most part everybody has heard that there's the PPP program and it's a forgivable loan. The Small Business Administration is who is right? Who? It's their program, but it's administered by the lenders. So it starts out as a typical low rate, typical loan provisions repaid over blah, blah, blah. But the whole point is that we want the loan to be forgiven and as long as the funds are used in some prescribe ways. So at least 60 percent of the funds are used for payroll qualify payroll expenses, and the remaining funds up to 40 percent are used for covered operating expenses, then the loan is forgiven and it does not need to be repaid. One of the things that changed with the Consolidated Appropriations Act is that the loan forgiveness is not taxable income and the expenses that are paid with those loan funds, those are still deductible and that changed with the consolidated appropriations act. Like I said, this was one of the things that made the tax planning more difficult this year. But that's it makes it a very valuable program. So as I mentioned, Small Business Administration program administered by the lending, by a lending institutions like banks, farm credit, any banks that are Small Business Administration approved which being abroad program. Most of them are, They take the application, they make the loan, they process the forgiveness. They ultimately get the funding from small business administration, and then they close out that loan forgiveness. So you would interface with your lender and they do the interface with the Small Business Administration. Okay, so here is one of the key things about the paycheck protection program that does not get nearly enough attention. There is, of course, the payroll expenses part which we all know about. And there is a portion of the paycheck protection program loans that are that is part of or calculated from the owner compensation. So you can have a business with no employees and be like a sole proprietorship and still qualify for around $20 thousand a paycheck protection program. Now that's the maximum and there are some considerations about how much that would be. But that owner compensation portion does not require employees. It's for the most part, everybody provided you qualify for the loan. In other ways. So under the economic aid Act, that was within the Consolidated Appropriations Act, they did two things. First, they reopened what the Small Business Administration calls the first draw. So that's actually it's under the cares Act rules that the first draw was what everybody did last year because the cares Act created the PPP loans. And then the funding was used up really quickly. And then they did it again and more businesses had access. Well, in under the consolidated appropriations act, they reopen that first draw. So if you didn't get a PPP loan last year, you can get a PPP loan now under pretty much the same the same rules, the same old rules, few changes, we'll talk about that. It also created a second draw. So even if you had a first draft PPP loan, you can do it again. And there are some new rules, new eligibility rules, new rules about how the money is spent. And so it did both these things that can benefit people in different ways. And the applications for both dries are due March 31st. Okay. So eligibility for the PPP loans, like I said, the first draw is under the old rule of the cares Act. So small businesses under 500 employees and experienced economic impact from COVID 19. So and that can be economic uncertainty, but the first draw is based on certifying there was an impact. But there's no specific requirements for what that impact has to look like. And then the second draw has somewhat more restrictive eligibility characteristics. So this is only small businesses under 300 employees. And of course, the two size requirements fit most farms. And the first, the second draw, you have to have received the first row alone and you have to have spent the funds in those authorized ways that 60 percent of quality, using 60% of the funds for qualified payroll expenses and the remaining funds up to 40 percent for qualified operating expenses under the rules of the first draw alone. And here's the catch with the second draw alone, you have to have experienced a 25 percent decline in gross receipts for some quarter in 2020 compared to that same quarter in 2019. So this was not a requirement in the first draw and this is only requirement for the second draw. So you go through quarter by quarter and look at was 2019 25 percent worse. It was 2020, I'm sorry. 25 present worse in gross receipts than 2019. So we talked about there being two parts to the loan amount. There's the payroll part of the loan amount, and then there's the owner compensation portion of the loan amount. So we're going to talk about them separately. They're separate calculations. They're separate portions of the loan amount and we're going to talk about them separately. The payroll portion alone is 2.5 months worth of the 2019 average monthly payroll. So it's kind of a mouthful. But what it does basically is all the payroll you paid in 2019, wages up to a $100 thousand per employee. Employer contributions to group insurances, employee retirements, the state unemployment that was paid. All those things are added up as payroll expenses. And then for the year and then take an average of that, and then multiply that by 2.5 months because the average was each month. And then 2.5 months worth of that. H of note H2A workers, their wages do not qualify for this program because it only counts for workers whose primary residence is in the US. Okay. Then eligible expenses, like I said, employee wages up to a thousand a hundred thousand dollars per employee. Contributions to group insurances and to employee retirement. And the state and local taxes like pseudo. Separate from this payroll part is the owner compensation portion which again applies to businesses even that don't have employees. It's specifically for the self-employed. So we're going to focus on sole proprietorships because it's much more straightforward about how this loan amount applies to sole proprietorships. It gets more complicated with multiple member LLCs, partnerships, S corporations, and then really doesn't apply for the most part to C corporations. So we're going to take the simple version. This is where it becomes really useful to work with your lender because everybody's situation will be a little bit different and they can tell you how it's specifically works for your specific business. So the owner compensation portion is based on average monthly gross income. This is new to the Consolidated Appropriations Act. Because the original one was based on net income. The original cares Act was based on net income. And the maximum amount of gross income that qualifies for this portion of the loan amount goes up to a $100 thousand. But of course it's not quite that straightforward. The gross income calculation for this, the owner compensation portion is actually the Schedule F gross revenues. So what we might talk about his gross receipts minus these payroll expenses, again, that group of payroll expenses, the switches, you know, these lines on the different Schedule F. So I'm really not, you certainly aren't going to remember which lines go where. But the idea is, it's not a real straightforward calculation. It's the gross revenues minus a bunch of stuff. But again, it's the retarded, the payroll wages and the contributions to implant it to retirement, contributions to insurances, et cetera, et cetera. And if that's up to a $100 thousand, then if the gross income calculation is a $100 thousand. Then the maximum loan amount is 20,833 and 32 cents. If your gross income is lower than a 100 thousand dollars, you still can qualify for the loan if you meet the other requirements. But it would be a lower amount. So of course, it gets more complicated because in the first I had, it keeps getting more complicated. This is this does not end here. The first draw alone when it was approved in the cares Act, as I said, was calculated on net farm income. Well, the Consolidated Appropriations Act made the the first two are loans open to calculate it on gross income? Well, if you had a first draw alone, you did not get the full the full amount that you would be entitled to. For example, the a $100 thousand of gross revenues would be 20 thousand 833. In addition, the loan is not already forgiven. You can go back and request an increase to your maximum from the same lender you got the first draw a loan from. So again, first row alone, you received it under the cares Act and it's not forgiven yet, then you can potentially qualify for the increase in loan amount. Banks are not required to honor that increase, but most of them do because they want to continue to to have your clientele. So the process of the PPP loans, first of course, you apply for the loan. It's with your lender. So you're going to go to your lender. And I put in an application for the loan. And the next step I haven't talked about this yet is to choose your covered period. And you hasn't different options based on whether it's a first draw a loan or a second draw alone. So you have this covered period to spend the funds on those qualified qualified appropriated distribution. So 60 percent for payroll expenses as qualify payroll expenses, the remainder up to 40 percent for the qualified operating expenses. And you can choose for the first draw. You can choose either eight weeks or 24 weeks. For the second draw alone, you can choose anything in between 8 and 24 weeks. Again, this stuff, you're not going to remember all the details and that's okay. Talk to your lender and get the details that apply to your situation from, from them. So you spend the money in the covered period and then you go back and you apply for forgiveness and that gets processed through your lender. And The ultimately through the Small Business Administration Program. Tax implications wise, the new legislation it cleared up a lot. Of course receiving the initial funds is reset, received is alone, so that's non-taxable. That's been pretty clear. This spending the funds part, this got pretty messy for awhile. But the way that it is right now for everyone, for first drone second draw. Payroll expenses are Schedule F expenses. They're just like any other expense. Any other time you would pay payroll. The owner compensation portion for small for a sole proprietorship is an owner draw, so that's not deductible. But you're entitled. You have to provide that compensation usually by writing a check to the owner for that portion of the loan amount and then the operating expenses. Those are Schedule F expenses as they would be for any other of your operating expenses. And then the forgiveness isn't taxable. So then you receive the forgiveness and you don't have to count additional taxable income to be taxed on it. So that is the Payroll Protection Program. The economic injury disaster loan is a second loan program and this one is not so much. This one isn't about employees. This one is a working capital loan. And the ideas you can borrow working capital if your business is in a situation to need it and then pay it back over a longer period of time. The way of that the first the cares Act, EIDL loans happened and the way that the EIDL loans are right now. It's a Small Business Administration program that has existed for a long time. These are basically disaster loans and the cares Act and the Consolidated Appropriations Act open them up and said, okay, COVID as an economic disaster, will open up these disaster loans to businesses that were impacted by COVID. And the first $10 thousand of that loan in the original cares Act, that was for anybody. The first $10 thousand of alone wasn't an advance. You didn't have to pay taxes on it, you didn't have to pay it back. It was just plain and advance. And then the remaining amount, that amount was alone again, with the amount being repaid over 30 years at 3.75% interest. The thing about this second round of this reopening of the economic injury disaster loans is that now the advances are called targeted. They call them targeted advances. You have to be in a low-income designated a low-income area, which maybe the Northern part of Michigan. But they haven't really said a lot about what, how they're defining that and have had gross receipts decreased by 30 percent. So it's much more restrictive. And they've also defined priority groups as people that didn't get the advances the first time. So the likelihood of getting the advance, the $10 thousand portion of the loan that is not repaid is is much slimmer than it was before. But you would apply for the loan and then they would contact you and let you know whether you would you would qualify for an advance. So this loan goes directly through with the Small Business Administration. So PPP loan goes through the lender. The EIDL loans you apply directly with the Small Business Administration and they manage the loan process. So they will evaluate your eligibility for the loan. And you're demonstrating through the loan you provide your monthly gross receipts for 2019 and 2020. And they're evaluating whether you need the working capital that this loan can provide. And then again, payback over a longer period of time. And so then you can submit the application. And the Small Business Administration contacts people who are approved with the terms of the loan. That is clear about what the terms are in terms of collateral and those sorts of things. In addition, the Small Business Administration can request additional documentation, program eligibility to be eligible by the loan. Eligible for the loan. The it's pretty broad. Gross receipts need to be negatively impacted by COVID-19. And again, you lay out your monthly gross receipts on the application and the small business administration decides, you know, does that represent negative impact is based on that. Again, decline in gross receipts and the advanced eligible to the targeted advances. This is kinda what I was saying before. You have to be the business has to be located in a low-income area. And then your business specifically had to have had a 30 percent decline in gross receipts comparing 2020 or what it was in the COVID era to 2019 or before COVID. But the priority is people who didn't get it in the first round. So to participate in the EIDL loans, you apply right with the SBA. Their application is right on their website. And then they contact you about terms and the eligibility for the advance, the deadline and this is a little longer being December 31st. Okay. The employee retention tax credits. So now we're into the tax credit section. This tax credit and the other tax credit will talk about next. So the IRS started with not very clear terms also, was based on a significant decline in gross receipts due to COVID-19. Well, they have since define what they mean by significant and there's separate credits for 20, 2020 and 2021. And there are separate requirements is essentially different definitions of what a significant decline beans. So the eligible decline differs for the 2020 credit, 2121 credit. Now the provisions differ by year plus the credit accounts are different by year because nothing is simple. So the 2020 credit can, these can be significant, up to $5 thousand per employee. 2021. The 2021 credit can be up to $14 thousand per employee. It's split up by quarters. So up to $7 thousand for the first quarter of the $7 thousand for the second quarter. Now the employee retention tax credit is specifically for employers. This is people that have employees. So the other the two long programs could apply to people that did not have employees. This tax credit is specifically designed for people that do. H2a workers, their wages count for this and seasonal employees as well. 2020 is eligibility. So the employee retention tax credit counts from March 12th, 2020 to December 31st of 2020, but splits the year up into quarters. So you're comparing the 2020 gross receipts for each quarter as compared to 2019. So you are looking again, quarter by quarter was 2020. How much worse essentially was 2020 with COVID or during the COVID era versus 2019, which is before that, an eligibility starts when you hit a quarter that had more than a 50 percent decline in gross receipts. So I put firm 1 and firm 2 down here. Farm one in quarter one, they had a 55 percent decline in gross receipts of 2019 was way higher in gross receipts then 2020. And so they're eligible starting in quarter one. We'll eligibility ends when the quarter is only 20 percent decline from 2019. So even though quarter two is 30 percent, so that's not quite 50 percent. But they haven't reached this magical number of 20, only a 20 percent decline. So they're still eligible in quarter 2. And then a quarter 3, they're not even they don't even have a 20 percent decline, but it goes through the quarter. That was less than 20 percent. And then Quarter 4, there was an increase in gross receipts and they no longer qualify from two. As you can see, there's various changes from 2020 versus 2019. At 15 percent decrease, a 10 percent increase. None of them are more than a 50 percent decline in gross receipts of 2020 versus 2019. And of course, the 2020 want eligibility is different. The 2021 tax credit applies to the first two quarters of 2021. And again, you're comparing gross receipts in 2021 to 2019, so pre COVID by quarter. And in this case, the eligible quarters are determined separately. So you can be eligible in quarter one, you can be eligible in quarter two, or you can be eligible in both end for each quarter. Now you just need a 20 percent decline from comparing 2121 to 2019 to qualify in each quarter. So if we look at farm one, they have a 25 percent decline in gross receipts from 2019. So 2021 has 25 percent lower receipts than 2019. And in the second quarter, they have a 20 percent decline. Both of those quarters are eligible for the employee retention tax credit in 2021. The second farm has a 10 percent decline in the first quarter, so not eligible that quarter would not be eligible because that's not a 20 percent decline. By quarter 2, they had a 25 percent decline and so they would be eligible in quarter two. And then farm three had increases in both quarters, so they're not eligible for either quarter. Amounts that they're different. The 2020 tax credit over the entire year up to $10 thousand per employee is included. So you qualified for the tax credit. Now the first $10 thousand of wages per employee has a tax credit up to fifth, or is the tetra is 50%. So the tax credit can benefit you up to $5 thousand per employee. The 2021 credit goes quarter by quarter. So you may be eligible in the first quarter and or eligible in the second quarter. And for each quarter, the first $10 thousand of wages per employee are included in the difference. Another difference between two tax credits. The tax credit for 2021 is 70% of wages per quarter of those first ten thousand wages. So you can have $7 thousand per employee in quarter 1, $7 thousand per employee in quarter two up to a 100 employees. So claiming these credits is little more complicated in both years. The tax credit is filed and reconciled on the form 943. So getting the 2020 tax credit may require amending the form 943. If you have H2A workers, it gets even more complicated than that. But the 2021 credit, we are still in quarter one. So not only is there time to get advances on the credit, which I'll explain in a minute. Also, there's time to manage around the tax credit if that applies to you. The way that you get the tax credit before the end of the year is by retaining your payroll deposits. So instead of depositing money each month or each quarter as you normally would, you actually hold on to that money as an advance on the employee retention tax credit. Or if that isn't something that works for you or you haven't done, you can file a form, form 7200 to get directly and advance on that tax credits. The assistance of a tax professional can be very helpful for this process. And then fourth, are moving on to the second family leave tax credits. The FM under the FFCRA, you'll hear this referred to as FFCRA leave. And usually people will go through really fast the FFCRA leave. And so this is probably more alphabet soup then even some of the other programs. So this one is a tax credit that provides for paid leaves to pay leaves to employees affected by COVID-19. Again, their personal health status. Quarantine, those kinds of things, as well as if there were need to provide childcare, if their kids are not able to go to daycare or school. So related tech care-taking responsibilities. Under the consolidated appropriations act, you don't have to provide leave, but if you do a 100 percent of those wages paid, provide a tax credit. There's still is a tax credit. If you did provide leave, paid leave in 2020 when you weld when you were supposed to. But this tax credit does apply to business owners if they are unable to work for the same reasons as affected by COVID-19, personal health status or care-taking responsibilities if the owners unable to work, there's also a 100 percent tax credit under their wages calculation for what? The equivalent for the business owner. These provisions all of these provisions in the tax credits around the provisions and March 31st. Okay. So that's the programs. Those are the four programs. And so now we're going to dig into a little bit. What do you have to have? What do you do in order to participate? We talked about program-specific requirements to participate, but like what does this mean for managing your farm business? Well, the big thing it means is you really records records records records. There is a ton of records that are required for 2019, 2020, and potentially 2021 depending on the program. So for the loans, you're showing loan eligibility, you're going to calculate the loan amount and verify how the funds are spent, all based on your records. And then for the tax credit, you're going to calculate the eligibility in amount and verify that if necessary. Again, all using your records. So some of this is your accounting records right here. Some of it is your payroll records and having those reconciled and match up and be able to be cross-referenced across accounting and payroll records. That comes in really handy for applying for these programs. Looking first at accounting records, the gross receipts for program eligibility applies to pretty much all the programs. Most of them require quarterly records from both 2019 and 2020. In addition, you need more records for the economic injury disaster loans and the employee retention tax credits. The first quarters and one of the things to notice, the first-quarter is that remember that March 12th to December 31st thing the first quarter's may have different start dates then the first day of the quarter. And then detailed records. If you get one of the loan programs, detailed records of how those loan funds are spent, because you'll have to justify that for forgiveness, you may have to provide the records, but you would need to know how each each dollar basically of that of the loan funds were spent and they require the same documentation. I'm about how the loan funds are spent for the economic injury disaster loan. And I mentioned this, the note on the employee retention credit, the 2021 credit, the 2020 when quarters for which that tax credit applies. We're still in those quarters. So you're still keeping those records. You're also still making some of your management decisions around that. You throughout this quarter. Payroll records wise. So this is going to take these these programs are going to take detailed payroll records for 2019, 2020, and potentially 2021. If you participate in the employee retention tax credit for 2021. As I said, we're having them reconciled across your accounting and tax records show that you're you know, you 943 is match the records in your accounting records in your accounting software or your handwritten records match your W2 is matcher 1040, probably your tax records. I'll reconcile. But being able to look that stuff up is important because things like you need to know per employee up to a $100 thousand, you know, et cetera, et cetera, et cetera. Yet be able to cross section your records information. Pretty good. Dyson slice this slice and dice it. Plus you have to have the eligible benefits. So those were the extra lines on the Schedule F that we're part of the owner compensation portion of the PPP even. And then I talked about advances for the 2021 tax credit or form 7200 because the the advancing on the tax credit related to payroll deposits. Okay, and then in bold here with stars and like big print, you can't use the same dollar, the same payroll dollars for more than one program. So it gets called like double-dipping is one way to refer to it. You can't double dip across these programs if you're counting loan, if you're counting payroll expenses, let's say a dollar, a payroll expenses for the PPP loan, you can't go and then get a tax credit on that same dollar. And that puts quite a lot of pressure on your payroll records in your accounting records to be pretty clear so that you know how you've approached this. Also, this is a reason to have your tax professional or to consult with your tax professional or a tax professional in terms of thinking through how to which dollars of payroll to put two, which program? And then last, I want to outline a couple of the additional resources, the official websites for these different government agencies that are providing the programs. So FSA for C, FAP, Business Administration for PPB and EIDL, the IRS website for the text credits. They're all actually really good. The FSA website on farmers that curve that really outlines the eligibility and how the payments are calculated and they split it up by different types of farms. I imagine when they go back to do CVE F3, they'll have a similarly easy to use website. And then the Small Business Administration website. They have a clearly marked, these are our COVID programs. Click on the button and then you can go look at them. They have FAQs right now. They have documents that specify specific things. Really well label that's also a good website and the IRS does a nice job as well of labeling, labeling their COVID programs, and directing businesses to the programs and FAQs also to provide details for people that are looking at their tax credits. I want to also highlight some of the other website resources. Msu Extension has a coronavirus response webpage that where the different resources that MSU is provides is they're listed there, put up one by one, and that's updated fairly regularly. And then since these are small business related programs offered broadly to small businesses, the Michigan Small Business Development Center has a number of resources that are really helpful. These of course, are not as specific, but they are generally providing information about the programs. So I want to wrap up with some poll questions similar to the first ones. But to kind of get a sense of how this, whether this webinar was helpful essentially. Did this webinar help you better understand the current coronavirus relief programs as they apply to agriculture. And ask you at this point now having watches, are you planning to apply for one or more of the coronavirus relief programs? And while folks are filling that out here for a gory, we do have a couple questions that came in. So a lot of these programs talk about you mentioned a lot of comparison back to 2019 and looking at income or wages. What about a new farm startup that's been impacted by COVID? What do those kind of folks have? Is there any kind of provision than these programs to account for those new farm startups that maybe didn't have 2019 information to compare two, there are that there's kind of this this line at February 15th where there are provisions of you were started by February 15th of 2020. There are provisions to figure that stuff out. If you were not started by that date. There are some provisions that allow you to participate, but not fully, not as fully and the program as if you were started prior to that date. And that's what I would refer to you UG are professionals on because that'll be a farm specific sort of answer. And we got kind of a long question here in the Q and a. It looks like multiple questions within one. Okay. Good. And the polling there. Okay. There's quite a lot in here about H2A workers. And what I would say about H2A workers is that the provisions of the programs that work with wages paid to H2 a employees are still being worked out. That is evolving, that is unclear in terms of some of the records. Obviously with the 943, that doesn't really match up with the 943. Well, that the guidance for that is not entirely clear yet and it is evolving. I would highly recommend working with your tax professionals with respect to how the programs apply. If you have H2A workers. And then there's some really good questions. We have a pretty long question here and there's some really good questions in there. These look fairly specific to certain kinds of farms and in particular to this particular firm. I would refer you again to your professionals because there are good answers. Well, hopefully they are good answers. A lot of stuff is still evolving. But your tax professional, you're, you know, the the, the continuing education they are going through is way more extensive than we can cover here. And there, the people to talk with about your specific situation. And if you have any H2A workers that where those wages are involved in these programs? Definitely get with your tax professional. Okay. And then there was one question that I partially insert online. I already was the question of what is forgiveness? And so essentially with the forgiveness, I think you can end up walking through this a little bit. The program where they've had essentially cancel the loan. If you've received funds, you don't have to pay those funds back. And I just want to see if there's anything you wanted to add addition to that, Cory, regarding the forgiveness and how that maybe works. Yeah. I think that summarizes it. Well, you are able to get the loan as if it were a norm alone, and then it just disappears. You file for that forgiveness. You provide your records and if it's not under a $150 thousand loan, the records you don't have to provide as nearly as many records. But i for that forgiveness, you sign the forums and that the logits disappears. So it's not taxable income and you don't have to pay it back. I see a question, unrelated question about not having income or wages and 2019. So number of these programs compare 2020 to 2019 and there are some provisions around new farms, but, you know, if 2019 was terrible and in some cases it really, really was. In some cases there's lots of cash flow issues that made certain quarters good and bad. But in the case the 2019 quarters don't match up and show a decline to 2020. That is a problem for a lot of the programs. The first drop PPP loan does not have a specific requirement. So you would potentially still be eligible for that program and would highly recommend talking with your lender about that program. And I think that takes care of so far of all the question I refer you to, we've got just a couple more minutes here. So if there are any other questions, folks feel free to put them in the chat or in the Q and a. I'm only way to save anyway, it's got an additional question. I just want to thank everybody for coming out today for joining us for not only this session this afternoon, but for all the session today. On behalf of not only myself and Corey with the other members of our farm business team here at Michigan State University Extension. We've got a number of great programs coming up the rest of the week, so definitely be sure to check those out. We do have one more question that came in kind of questionnaires as they put it in quotations or zombie corporations, eligible. Cashflow and debt service is a trap for most Ag business and startup. Our company is not feasible. Having to justify why digital government funds should be extended. Or any information on that one work or not entirely sure what the participant is is asking. Casual and debt service certainly is a problem for a lot of agro businesses and farms. From a like working capital standpoint, that's really what the EIDL loan is designed for, but that is alone and not a grant program. There's no payments at this aside from the targeted advance, There's no payments associated with that program, That one would be repaid it just over a longer period of time. And then the rest of the question seems to be asking about do you have to justify why you should be able to get these funds? And essentially, if you meet the requirements of the program, there's no additional justification needed. All right. All right, folks, we're closing on the end of the hour here. And once again, thank you all for participating with us today. Thank you for for attending this session. Thank you, Corey for sharing this information with us. And again, folks, feel free to check out the rest of the sessions this week as part of the egg ideas to grow with virtual conference. And everyone enjoy the rest of your day.

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