The Farm Service Agency announced the United States Department of Agriculture will partner with the Internal Revenue Service to reduce fraud in farm programs and streamline payment limits for family farmers.

The actions are intended to strengthen the integrity and defensibility of USDA farm safety net programs and help the agricultural industry to meet requirements included in the 2008 Farm Bill.

This announcement will ensure 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.

The USDA has finalized a Memorandum of Understanding with the IRS to establish an electronic information exchange process for verifying compliance with the adjusted gross income provisions for programs administered by the USDA's FSA and Natural Resources Conservation Service. This agreement will ensure payments are not issued to producers whose adjusted gross income (AGI) exceeds certain limits. The limits set in the 2008 Farm Bill are $500,000 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.

It is worth noting these income limits might seem unrealistic in our three-county service area, but in some states and counties, some producers apparently have incomes that exceed the eligibility threshold. The producers in our area just smile and say, "I wish,' further evidence of just how different farming can be from state to state.

The electronic process the USDA developed with the IRS reviews data from tax returns, performs a series of calculations and compares these values to the AGI limitations from the 2008 Farm Bill. The FSA and NRCS will receive a record that indicates whether or not the program participant appears to meet the income limits. Written consent will be required from each producer or payment recipient for this process. No actual tax data will be included in the report the IRS sends to the USDA. As part of the review and evaluation process, participants whose AGI might exceed the limits will be offered an opportunity to provide third-party verification or other information to validate their income.

Meanwhile, beginning with the 2010 program year, the USDA amended the rules that govern the requirements to be "actively engaged" in farming.

These rules apply to eligibility for payments under the Direct and Counter-cyclical Program (DCP) or Average Crop Revenue Election (ACRE) program administered by the FSA.

The USDA has implemented the following change to permit certain operations — most often family run operations — to meet "actively engaged" in farming requirements under less restrictive rules.

Every stockholder or member of a legal entity, such as a corporation, does not have to contribute labor or management if 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.

This change will be more user friendly for some family owned farm corporations, which account for about 5 percent of our local farms.

Luke Fritz is executive director of the Butler County Farm Service Agency.