Farm Programs: Additional Steps Needed to Help Prevent Payments to Participants Whose Incomes Exceed Limits Page: 10 of 61
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We conducted this performance audit from June 2012 to August 2013 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.Background
A variety of federal farm programs provide benefits to participants,
including payments, to help protect against the risks of low crop prices or
bad weather, among other hardships. These payments are made in
accordance with individual program rules to participants who own
agricultural land or produce certain crops. In addition, conservation
payments provide assistance to participants to help them safeguard
environmentally sensitive land by, for example, retiring land from
agriculture or implementing practices such as erosion control measures
that protect the land during farming. Participants can receive these
payments directly or through legal entities including partnerships,
corporations, and trusts.
The 2008 Farm Bill established eligibility rules for farm and conservation
programs, including separate income limits for an individual's or legal
entity's farm income and nonfarm income. These income limits remain in
effect through September 2013. Both types of income use as their
foundation total adjusted gross income, as defined in the Internal
Revenue Code, or a comparable measure,8 and both types are averaged
over the 3 most recent tax years. Under present limits, participants are
not eligible to receive some farm payments if their average adjusted gross
nonfarm income exceeds $500,000; another type of farm payment if their
average adjusted gross farm income exceeds $750,000; and
conservation payments if their average adjusted gross nonfarm income
exceeds $1 million, unless at least 66.66 percent of their average
adjusted gross income is average adjusted gross farm income. Because
these income limits apply to individuals, under certain conditions, a
husband and wife could collectively earn up to $1 million in average
adjusted gross nonfarm income and $1.5 million in average adjusted
8Adjusted gross income is defined as taxable income from all sources, including earned
income, such as wages and salaries, and unearned income, such as interest or dividends,
minus specific deductions.GAO-13-741 Farm Income Limits
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United States. Government Accountability Office. Farm Programs: Additional Steps Needed to Help Prevent Payments to Participants Whose Incomes Exceed Limits, report, August 29, 2013; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc302127/m1/10/: accessed April 19, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.