USDA AND IRS FORM PARTNERSHIP TO ENSURE COMPLIANCE IN FARM SAFETY NET PROGRAMS

News Date January 05, 2010

n the final day of 2009, Agriculture Secretary Tom Vilsack announced a partnership with the USDA and the Internal Revenue Service (IRS) to aid in compliance verification for their department’s farm safety net programs.  Through a finalized Memorandum of Understanding, the USDA and IRS establish an electronic exchange process to ensure compliance with 2008 Farm Bill requirements for adjusted gross income (AGI) provisions in USDA’s Farm Service Agency and Natural Resources Conservation Service.

According to Secretary Vilsack, this new information exchange will help protect the future of the safety net.  "Today's announcement will ensure that the producers who depend upon the safety net of USDA programs will have future access to these programs by enhancing the overall integrity of the programs. It will also provide more flexibility for family farm operations across the country."

In the meantime, USDA also amended the rules governing the definition of ‘actively engaged’ in farming.  Beginning with the 2010 program year, the new rules will determine eligibility for the Direct and Counter-cyclical Program and the Average Crop Revenue Election program.  In order to be considered ‘actively engaged,’ 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.

For more information on the new USDA/IRS partnership, as well as program rule changes, please visit the FSA website or your local FSA office.  (Contact: David Hickey)