USDA, IRS Join to Check Farmer Income Levels Posted on 1/11/2010
USDA said this week it’s finalized its agreement with the Internal Revenue Service (IRS) on verifying farm program payment limitations, and is working to streamline eligibility rules for family-run farms. USDA said the IRS partnership will help reduce fraud as well. The IRS link will allow the department to verify the adjusted gross income (AGI) provisions for programs, meaning if farmers make too much money -- $500,000 for nonfarm average AGI for commodity and disaster programs; $750,000 farm average AGI for direct payments, and $1 million nonfarm average AGI for conservation programs – they will cease receiving payments. It’s estimated about 23,506 people are affected by the income limits. USDA also shifted the definition of the “actively engaged” in farming requirements to qualify for direct and counter-cyclical program (DCP) or Average Crop Revenue Election (ACRE). The changes will allow certain farms – most often family-run operations – meet the “actively engaged” requirements under what the department believes are “less restrictive rules.” Says the new policy:
“Every stockholder or member of a legal entity, such as a corporation, does not have to contribute labor or management if both 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.“
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