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Agriculture Secretary Tom Vilsack announced on Dec. 31 that USDA and the Internal Revenue Service (IRS) would work together to verify farmers’ and ranchers’ income and verify compliance with farm and conservation program payment limitations.
The limits set in the 2008 farm bill are $500,000 nonfarm adjusted gross income (AGI) for commodity and disaster programs; $750,000 farm average AGI for direct payments; and $1 million nonfarm AGI for conservation programs.
USDA said that written consent would be required from each producer or payment recipient for the income information sharing to occur, no actual tax data would be provided to USDA and program participants whose AGI appears to exceed the limits would be given the chance to provide third-party verification or other information to validate their income. American Farm Bureau Federation farm policy specialist Tara Smith said the announcement may seem scary to farmers and ranchers at first, but using reliable income data to reduce fraud is a good thing.
“I think everyone wants to be sure that farm program payments are going to those folks who are eligible,” she said. “No one wants to see payments go where they aren’t supposed to go and if this system helps ensure that, that’s definitely a positive thing.”
A silver lining, according to Smith, is also that producers won’t have to go through their local USDA office to prove their income eligibility.
“One of our concerns has always been that farmers are required to bring business documentation or tax documentation to a local Farm Service Agency office,” Smith explained. “And while we admire the work that our local FSA offices do, that is very sensitive information and a lot of times the security that needs to be in place for that kind of information just really isn’t there.”
Instead, farmers and ranchers will be able to fill out a form that goes directly to the IRS. USDA will not subject producers to an audit if their income doesn’t come close to the payment limits.
“That wouldn’t make a lot of sense, and we’re glad they corrected that in the final rule,” Smith said.
AFBF provided comments on the proposal last April. Smith says USDA addressed the concerns that Farm Bureau outlined. For example, AFBF was concerned that once someone was red-flagged, he or she would end up back at the local FSA office. The opportunity to provide third-party verification is with the state FSA office. Also, USDA has confirmed that no list of red-flagged producers will be subject to Freedom of Information Act requests.
“Really, they did everything we asked them to do in order to make this work better for producers,” Smith said, “and we appreciate that.” This article originally appeared in American Farm Bureau's FB News publication, January 11, 2010. |