USDA Sets New Income Limits for 2012

USDA has enacted a new adjusted gross income policy for 2012. It may affect your eligibility for certain farm programs.

Published on: May 3, 2012

Q: What is the new adjusted gross income limits?

A: For the 2012 program year, a $1 million average adjusted gross income (AGI) will be applied to all persons and legal entities that request 2012 DCP and ACRE direct payments.  The new $1 million average AGI limitation includes all income, both farm and nonfarm, of the person or legal entity, and is in addition to the $500,000 average nonfarm AGI limitation, the $750,000 farm AGI limitation, and $1 million average nonfarm AGI limitation for conservation programs that have been in effect since 2009. 

Q: Who is subject to the AGI policy and what program do they pertain to?

USDA Sets New Income Limits for 2012
USDA Sets New Income Limits for 2012

A: Virtually all programs administered by FSA are subject to AGI provisions.  However, different programs are subject to different AGI levels.

A producer whose nonfarm average AGI exceeds $500,000 would be ineligible for all commodity, price support, and disaster assistance benefits.  Examples of impacted programs include direct, counter-cyclical, and ACRE payments; ELAP, LFP, LIP, NAP, SURE, and TAP payments; marketing loan gains and LDP's.

If a producer's average farm AGI is greater than $750,000, ineligibility would be limited to DCP/ACRE direct payments, while an average farm and nonfarm AGI exceeding $1million would result in ineligibility for DCP/ACRE direct payments in 2012. 

If average nonfarm AGI for a producer exceeds $1 million and less than 66.66% of the average AGI is derived from activities relating to farming, ranching, and forestry, a producer is ineligible for conservation program benefits, such as CRP, EQIP, WRP, EQIP, and GRP. 

Q: How will FSA verify income and what documents will I need to submit?

A: Producers completing an AGI certification must also agree to provide written consent to IRS for the disclosure of certain information to FSA, which is accomplished by completing and submitting Form CCC-931 to the local county office. Once received, IRS will provide results to FSA on a monthly basis. The results provided by IRS, however, do not include any dollar amounts or calculations, rather indicators if one or more AGI limitations are possibly exceeded. 

In those instances when the analysis results in an AGI limitation possibly being exceeded, the producer will be notified by letter and asked to provide either of the following to their respective state office:

A signed statement from a CPA or an attorney that verifies the average AGI did not exceed the applicable AGI limitations

Copies of the complete Federal tax returns that were filed with the IRS for the applicable tax years.

A signed acknowledgment that income exceeds the applicable AGI limitation if the certification was in error.

A review of the documentation will be completed and a determination of compliance with AGI provisions will be made. Notification of the review results will be provided to the producer in writing and will contain appeal rights if the determination is adverse.  If a producer fails to provide the requested information within 30 days, a determination of ineligibility will be made and a refund of applicable program benefits will be required.

Summing up

New adjusted gross income limits for farm programs will apply in 2012. Different income limits apply to different programs and the FSA will use several methods to verify your income.

For more information, contact your FSA office or see www.fsa.usda.gov.

Source: North Dakota FSA