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Federal Farm Programs: USDA Needs to Strengthen Controls to Prevent Payments to Individuals Who Exceed Income Eligibility Limits

GAO-09-67 Published: Oct 24, 2008. Publicly Released: Nov 24, 2008.
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Farmers receive about $16 billion annually in federal farm program payments. These payments go to about 2 million recipients, both individuals and entities. GAO previously has reported that the U.S. Department of Agriculture (USDA) did not consistently ensure that these payments went only to those who meet eligibility requirements. GAO was asked to evaluate (1) how effectively USDA implemented 2002 Farm Bill provisions prohibiting payments to individuals or entities whose income exceeded $2.5 million and who derived less than 75 percent of that income from farming, ranching, or forestry operations, (2) the potential impact of the 2008 Farm Bill's income eligibility provisions on individuals who receive farm payments, and (3) the distribution of income of these individuals compared with all 2006 tax filers. GAO compared USDA data on individuals receiving payments with the latest available Internal Revenue Service (IRS) data on these individuals.


Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Agriculture To provide greater assurance of program integrity, the Secretary of Agriculture should direct the Administrator of the Farm Service Agency to work with the Internal Revenue Service to develop a system for verifying the income eligibility for all recipients of farm program payments. If the Secretary determines that it does not have the authority to develop such a system with the Commissioner of the Internal Revenue Service, the Secretary should request this authority from Congress, as appropriate.
Closed – Implemented
In 2009, the U.S. Department of Agriculture (USDA) and the Internal Revenue Service (IRS) signed a memorandum of understanding launching, for the first time, a process in which IRS performs an initial screening of recipients of farm program payments to identify those whose incomes may exceed limits, and USDA's Farm Service Agency makes an eligibility determination. So far, IRS and the Farm Service Agency have conducted this process for program years 2009 and 2010, and in March 2013, the Farm Service Agency began the process for program years 2011 and 2012.

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Agricultural industryAgricultural programsComputer-assisted passenger screening systemCost analysisEligibility criteriaEligibility determinationsFarm income stabilization programsFederal fundsFinancial managementFinancial statementsFunds managementIncome statisticsIncome taxesInternal controlsLoansPersonal income taxesProgram managementTax returnsCost awarenessCost estimatesProgram goals or objectives