We have done a post on this already but continue to get some emails and feedback asking why a farmer can’t defer Phase 1 payments of the Emergency Relief Program (ERP) to 2023. These types of payments are similar to crop insurance and yes, they can normally be deferred one year but let’s review the three key requirements to defer crop insurance proceeds:
- Farmer is on the cash method of accounting (almost all are),
- Farmer normally reports more than 50% of total sales in the year after harvest (most do), and
- The farmer can only defer to the year after the damage was incurred
The last item is what blows up any ability to defer Phase 1 payments. These payments are for damage that occurred in 2020 and 2021. 2022 is the latest you could defer 2021 payments and since you collected them this year, you are stuck with reporting these payments in 2022.
Perhaps some Phase 2 payments might be deferrable assuming it was for 2022 damage but at the speed that FSA is proceeding, that appears to be very slim.
