USDA, IRS Join Forces

New effort launched to battle payment fraud.

Published on: Mar 20, 2009

USDA's discovery of nearly $50 million in payments to ineligible farmers has the ag agency teaming with the Internal Revenue Service to assure that high-income individuals and entities who request payments meet limits set forth in the 2008 Farm Bill.

"One of the goals of this Administration is to make certain that USDA payments are not issued to individuals and entities that exceed income eligibility limits established by law," comments Ag Secretary Tom Vilsack, in a press statement. "Once this verification system is fully operational, high-income individuals and entities will be identified by USDA before farm program payments are actually disbursed to them."

Starting with the 2009 crop year and for successive years, in order to be eligible for USDA payments, all recipients will have to sign a separate form which grants IRS authority to provide income information to USDA for verification purposes. Before IRS will provide the information for a particular producer, IRS form 8821, or a similar form, must be obtained from each producer authorizing the release of information. Failure to obtain such form will make the producer ineligible for program benefits.

Last October, the U.S. Government Accountability Office released a report showing that because USDA had inadequate management controls - including review tax returns - it could not ensure that payments were made only to qualified individuals. That GAO report also found that of the 1.8 million individuals receiving farm payments from 2003 through 2006, more than 2,500 had an average adjusted gross income that made them ineligible for farm payments. Lacking any ability to verify income, USDA paid more than $49 million to ineligible recipients.

The 2008 Farm Bill mandates that recipients of many payments, including direct payments, are not eligible if their gross on-farm income average for the previous three taxable years is greater than $500,000. And, direct payments cannot be paid to participants whos average adjusted gross farm income for the three-year period exceeds $750,000.