By STEVE STUBBLEFIELD
For more than 20 years, Congress and the U.S. Department of Agriculture (USDA) have worked to ensure farm program benefits only go to farmers who are actively engaged in farming. The American Taxpayer Relief Act of 2012 extends the required implementation of the actively engaged and payment limitation provisions of the 2008 Farm Bill for the 2013 program year.
The 2008 Farm Bill required program participants to meet specific provisions to receive farm program benefits. Below is a summary of those provisions.
• Actively Engaged in Farming – To be eligible for payments and benefits under specified programs, all program participants, either individuals or legal entities, must provide significant contributions to the farming operation to be considered as “actively engaged in farming.” Contributions can cinsist of capital, land, and/ or equipment, as well as active personal labor and/ or active personal management. The management contribution must be critical to the profitability of the farming operation and the contributions must be at risk.
• Additional Payment Eligibility Requirements – Each partner, stockholder or member with an ownership interest must contribute active personal labor and/or active personal management to the farming operation on a regular basis. The contribution must be identifiable and documentable; as well as separate and distinct from the contributions made by any other partner, stockholder or member. If any partner, stockholder or member with an ownership interest fails to meet this requirement, program payments will be reduced by the corresponding share held by that partner, stockholder or member. There is an exception allowed for legal entities, such as corporations, if total direct payments received both directly and indirectly, by the legal entity and its members do not exceed $40,000.
• Exemptions to the General Requirements – Landowners may be considered “actively engaged in farming” if they contribute the owned land to the farming operation and in return, receive rent or income for the use of the land. The landowner’s share of the profits or losses from the farming operation must also be commensurate with the landowner’s contributions to the farming operation and the contributions must be at risk.
Spouses may both be considered “actively engaged in farming” if one spouse makes all of the requisite and at-risk contributions. Sharecroppers may be considered “actively engaged in farming” if the sharecropper makes a significant contribution of active personal labor to the farming operation and in return, receives a specified share of the crop(s) produced on the farm. The sharecropper’s share of the profits or losses from the farming operation must be commensurate with the sharecropper’s contributions and the contributions must be at risk.
A cash-rent tenant will be ineligible to receive payments on the cash-rented land unless the tenant makes a significant contribution of active personal labor. If the cash-rent tenant does not provide labor, he or she must make a significant contribution of both active personal management and equipment to the farming operation. All other “actively engaged in farming” requirements apply as well.
• Foreign Persons – Foreign persons, other than registered aliens, are not eligible to receive any program benefits including commodity loans, unless that person provides a significant contribution of capital, land, and active personal labor to the farming operation.
• Notification Requirements – Every legal entity earning payment subject to these rules must report to their local FSA committee the name and social security number of each person who owns, either directly or indirectly, any interest in such legal entity. The legal entity is also required to inform all members of the rules regarding payment eligibility and payment limitation.
Additional information may be obtained regarding common attribution, minor child rules, joint operations and general partnerships, by contacting the local FSA Service Center located at 811 Faulkner Springs Road, McMinnville, or by visiting the FSA online at www.fsa.usda.gov.