We hear that the final payouts for the PARP program may not occur until October. We know that the ERP Phase 2 and PARP programs both closed on July 14 and we also heard that the local offices had until August 11 to get all of the reports done, etc.
In order to calculate the final PARP payments, the FSA must first administer the final ERP Phase 2 and Phase 1 calculations for 2020. This is required since any additional ERP payments result in additional disaster year income for 2020 which may reduce the amount of PARP proceeds.
The reason for needing to determine both Phase 2 and Phase 1 is that there may be excess funds from Phase 2 that might be applied to Phase 1. If that happens, then FSA must calculate the final ERP amounts to be applied against the PARP income and then determine how much of a percentage of PARP will be allowed.
FSA originally estimated $2.5 billion of PARP claims with only $250 million available for payouts. However, based on our discussions with many CPAs around the country, we believe that FSA will not receive that many claims; therefore, the actual payout percentage may be higher than 10%.
We shall see, however, that may occur in October if not later. Also, remember that payment will be income in 2023 and can’t be deferred to 2024.
