We know these are trying times. Everyone connected with equine enterprises is impacted by the global pandemic in some way. The Reining Horse Foundation, in cooperation with NRHA, encourages you to be proactive in accessing programs meant to keep your business viable.
On March 27, the U.S. Congress passed and President Donald Trump signed the CARES Act, teeing up approximately $2 trillion in emergency aid to American taxpayers, small businesses, and nonprofits and charities. Because most equine enterprises characterize themselves as small businesses and include many nonprofits, such as state associations and equine rescue operations, the package addresses many challenges facing the horse industry. The following are highlights.
Small Business and Nonprofits
The act bolsters the Small Business Administration’s (SBA) Paycheck Protection Program, establishing a maximum loan amount to $10 million through December 31, 2020. The act defines eligibility for loans as a small business or 501(c)(3) nonprofit with not more than 500 employees “or the applicable size standard for the industry as provided by SBA.” The act further extends eligibility to sole proprietors, independent contractors, and other self-employed individuals. This should provide assistance to trainers, farriers, and veterinarians, among other solo practitioners.
The act also expands the Economic Injury Disaster Loan (EIDL) program currently available to small businesses to include “any individual operating as a sole proprietor or an independent contractor during the covered period” from January 31, 2020, to December 31, 2020. Luckily for many breed-specific associations and state groups, for example, the act extends the program to private nonprofits. The American Horse Council (AHC) COVID-19 Resources web page includes links related to the EIDL program and will post updated information as details unfold.
Tax and Payroll Flexibility
Pandemic Unemployment Assistance—The act extends unemployment benefits to the self-employed, independent contractors, those with limited work history, and others who are unable to work as a direct result of the pandemic. Self-employed professionals such as trainers and other independent contractors impacted by economic disruptions, including event cancellations, caused by “social distancing” should find this provision helpful.
Individual “Recovery Rebates”—Individuals with adjusted gross income up to $75,000 are eligible for a $1,200 cash rebate from the IRS. The amount rises to $2,400 for married couples.
Charitable Contribution Flexibility—The provision encourages Americans to contribute to churches and charitable organizations in 2020 by permitting them to deduct up to $300 of cash contributions, whether they itemize their deductions or not. This provision should blunt the impact of equine charities, including rescue operations. The Reining Horse Foundation is a qualifying 501(c)3 charity.
Charitable Contribution Increases—The act increases the limitations on deductions for charitable contributions by individuals who itemize, as well as corporations. Technical details will follow.
Employer Payroll Tax Flexibility—The act allows employers and self-employed individuals to defer payment of the Social Security tax until 2021 and beyond. Employers generally pay a 6.2% Social Security tax on employee wages. While the scope of this provision is not yet clear, it could extend to equine equipment makers and other manufacturers and merchants that comprise the complex supply chain for the horse industry.
Additionally, programs may be available for international members from their governments and community organizations. Stay tuned to all NRHA channels for the latest developments.
This CARES Act program summary is shared courtesy of the American Paint Horse Association
NTRA to Air Teleconference on Federal Stimulus Programs
On April 1 at 11:30 a.m. Eastern, the National Thoroughbred Racing Association will hold a teleconference with in-depth analysis of key tax and business provisions impacting businesses and individuals involved in the horse racing and breeding industry. The teleconference is open to media, representatives of equine businesses, their employees, and other individuals in the equine industry impacted by the pandemic.