The Farm Service Agency and the Internal Revenue Service are partners in a data-sharing process to identify and verify the average adjusted gross income for producers participating in U.S. Department of Agriculture programs for the 2009 and 2010 payment years.
A memorandum of understanding now exists with the IRS that establishes an electronic information-exchange procedure to validate compliance with the income provisions of both FSA and the Natural Resources Conservation Services administered programs.
This agreement will ensure that payments are not issued to producers whose average gross income exceeds certain limits.
Written consent is required from each producer and is documented on forms CCC-927 for individuals, and CCC-928 for entities. The forms are to be mailed to IRS by no later than June 15.
No actual tax data will be included in the report that IRS sends to USDA. As part of the review and evaluation process, participants whose average gross income may exceed the limits will be offered an opportunity to provide third-party information to verify their income.
Also, beginning in the 2010 program year, USDA has amended the rules that govern the requirements to be “actively engaged” in farming.
Rules have been changed to permit certain operations, most often family-run operations, to meet the “actively engaged” in farming requirements under less restrictive rules.
Every stockholder or member of a legal entity, such as a corporation, does not have to contribute labor or management if both of the following apply:
• At least half of the interest in the legal entity is held by stockholders or members who are providing active personal labor or active personal management that altogether qualifies as a significant contribution to the farming operation;
• The total direct payments received, both directly and indirectly, by the legal entity and each of the members does not exceed $40,000.
Bill Harmon is executive director of the Marion County FSA office.