Will Implementation of new Qualified Pass-Through Entity Rules get Pushed to 2027
If new rules are not in place by June 1, will it get pushed to the 2027 crop
We have discussed many times the new Qualified Pass-Through entity rules that were passed by OBBBA last July.
In brief, any entity other than a regular corporation will be treated like a general partnership.
Under the old rules, a general partnership with three equal active owners would qualify for three payment limits. However, if the general partnership, then converted to an LLC or other entity, it would then be limited to one payment.
OBBBA fixed this, however, there was no effective date on the fix. We are starting to hear some chatter that the new rules may get pushed to the 2027 crop year. We already had a feeling it might skip the 2025 crop year based on how they treated FBA payments where entities were limited to one payment limit.
One of the reasons for the concern on a delay deals with the entity reporting requirements. Normally, all farm operations are required to report their entity structure by June 1 on FSA Form 902. If it is an entity, this reporting is on Form 902E and as of yet, this form has not been updated to reflect the new entity reporting rules.
Therefore, if it is not updated and staff is not trained, then it may be difficult to get this in place for the 2026 crop year.
We have heard that the delay is due to the government shutdown last year, however, that was more than four months ago, and it seems that they could “easily” implement the new rules, but it appears other priorities have trumped it.
If it does get pushed to 2027, many farmers who operate as an entity will see substantially curtailed payments compared to their expectations. If this affects your farm operation you may want to reach out to your representative and explain how it affects your farm operation.
It seems that Congress intended for this change to apply now and without pressure on USDA, it may not happen.