Implementation of the 2008 farm law is progressing, but the National Cotton Council is concerned the final rules are not closely reflecting the law’s provisions and Congressional intent.
What about the process for implementing the payment eligibility rules?
In early January, USDA published a Final Rule establishing the regulations for the 2010 crop. The Final Rule follows the Interim Rule covering the 2009 crop and continues an alarming trend of USDA ignoring Congressional intent. With the exception of some relief in the determination of “actively-engaged-in-farming” for certain smaller operations, the Final Rule reinforces the onerous restrictions contained in the Interim Rule. The NCC has a number of ongoing concerns that have been conveyed both in comments and in testimony.
What are the concerns about the rules?
The USDA rule goes well beyond the 2008 farm law provisions. For example, the farm law does not contain the USDA-imposed requirement that all members of a farming entity make a regular, identifiable, documentable, separate and distinct contribution of active personal labor or active personal management. Despite comments from the NCC and most commodity and general farm organizations, as well as a letter cosigned by 69 representatives and 21 senators urging the Secretary to publish a final rule that more closely reflected Congressional intention, USDA rejected virtually every recommendation and is moving forward with reviewing 2010 farm plans based on the Final Rule.
In addition, the NCC filed comments with USDA expressing concerns with actions regarding the Conservation Stewardship Program (CSP). Producers are being encouraged by USDA officials to enter into CSP contracts that do not conform to the underlying statute. The 2008 farm law clearly establishes a five-year payment limit of $200,000 per “person or legal entity” for “all contracts” entered into during any “five-year period.” Without basis, USDA has instituted an overly-restrictive limit of $40,000 per year on CSP participants and a five-year limit of $200,000 per contract, regardless of the number of participants associated with the contract.
What’s the latest regarding audits for the income means tests?
USDA recently 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 commodity and conservation programs. The IRS electronic audit procedure reviews tax return data, performs a series of calculations and compares the results to the statutory income limitations. Every program participant must complete a Farm Service Agency consent form and return it to the IRS by June 15. Failure to do so will result in program payments suspension. Participants identified in the IRS audit as possibly having income that exceeds the applicable limits will have to provide third party verification or other information to confirm they are in compliance.
Mark Lange is president and chief executive officer of the National Cotton Council of America. He and other NCC leaders contribute columns on this Cotton Farming page.