Enclosure Page 2

FCIC Interpretation of Procedure

Risk Management Agency Interpretation of Federal Crop Insurance Corporation Provisions:

Subject: Request dated March 8, 2021, to the Risk Management Agency (RMA) for an interpretation 

regarding whether subparagraphs 51A(1) and (2) allow an Approved Insurance Provider (AIP) to 

request a Substitute Schedule F from an insured when a Schedule F has been filed with the Internal 

Revenue Service (IRS) and then use the information in the Substitute Schedule F as cause to cancel 

the insured’s WFRP policy.

The relevant handbook procedures provided by the requestor are subparagraphs 51A(1) and (2):

51. IRS Tax Forms and Verifiable Records and/or Direct Marketing Sales Records

A. IRS Tax Forms

(1) Copies of the applicable IRS tax form(s), such as Schedule F, Form 1040, Form 

1120, Form 1041, Form 1065, Form 1102S, and Form 4835, must be provided to the 

AIP for each tax year in the whole-farm history period.

The AIP must request verifiable records and/or direct marketing sales records to 

verify the allowable revenue and allowable expenses on the Whole-Farm History 

Report when the AIP has reason to believe the farm tax form(s) do not provide 

adequate documentation of revenue or expenses for WFRP purposes. In such cases, 

the AIP must not accept any Whole-Farm History Report if the allowable revenue for 

any year cannot be verified through the requested verifiable records and/or direct 

marketing sales records.

(2) Persons who do not file a Schedule F tax form must report and certify allowable 

revenue and expenses in the same manner as provided on a Schedule F tax form by 

completing a Substitute Schedule F. The Substitute Schedule F must contain all 

information that would appear on a Federal Schedule F tax form and must be 

sufficient to complete the Allowable Revenue Worksheet and Allowable Expense 

Worksheet. The person must use the same accounting period when completing the 

Substitute Schedule F as was used on the farm tax form they filed with the IRS for the 

applicable year.

Interpretation Submitted by Requestor(s)

The first requester interprets subparagraph 51(A)(1) as it is the AIP’s duty to request verifiable records 

and/or direct marketing sales records if the AIP has, “reason to believe the tax form(s) do not provide 

adequate documentation of revenue or expenses for WFRP purposes.” In cases where the AIP has 

reason to believe that the tax forms are not adequate or supported by verifiable records, the AIP must 

not accept the Whole-Farm History Report. However, if the AIP does request supporting 

documentation and accepts the Whole-Farm History Report, then the requester believes that the AIP 

has no basis for asking an insured to complete and submit Substitute Schedule F forms when the 

insured has filed Schedule F forms with the IRS and provided them to the AIP. The AIP may only 

accept a Substitute Schedule F to establish coverage when the insured does not file Schedule F tax 

forms with the IRS.
Enclosure Page 3

FCIC Interpretation of Procedure

The first requestor continues that when a Schedule F is filed with the IRS, provided to the AIP by the 

insured, and used to establish coverage, the first requester believes that the AIP should not 

subsequently require the insured to complete and submit Substitute Schedule Fs. Under these 

circumstances, information supplied by the insured on a Substitute Schedule F form cannot and should 

not be used by the AIP to retroactively cancel the WFRP Policy. The first requester believes that it is 

contrary to paragraph 51 of the 2018 WFRP Pilot Handbook for the AIP to compare and use 

information on a Substitute Schedule F (which should not have been requested) with information on 

the insureds’ Schedule F tax forms to cancel the insured’s policy.

The second requester interprets subparagraph 51A(1) to mean that if the insured files a Schedule F and 

the AIP, after initially accepting the Whole-Farm Revenue History Report that relied on the 

information reported on the filed Schedule F forms, determines that or has reason to believe that the 

information on the filed Schedule F forms is not adequate to determine allowable revenue and 

allowable expenses on the Whole Farm History Report, the 2018 WFRP Pilot Handbook permits the 

AIP to request that the insured complete a Substitute Schedule F form using the verifiable records in 

an attempt to establish coverage that is accurate and reflects the revenue and expenses of the farming 

operation.

Federal Crop Insurance Corporation Determination

FCIC agrees with the first requester’s interpretation of subparagraph 51A(1) of the 2018 WFRP Pilot 

Handbook that is the duty of the AIP to request verifiable records and/or direct marketing sales records 

if there is reason to believe the tax forms are not adequate to determine the insured’s allowable 

revenue and expenses. FCIC also agrees with the first requester’s interpretation that an AIP cannot 

require an insured to submit a Substitute Schedule F if the insured has filed a Schedule F with the IRS.

FCIC disagrees with the second requester’s interpretation that the 2018 WFRP Handbook permits the 

AIP to require the insured to complete a Substitute Schedule F using the requested verifiable records. 

Sections 16(a)(1)(i) and (c)(1) of the 2018 WFRP Pilot Policy state when the insured is required to 

submit a Substitute Schedule F.

Although, FCIC agrees the AIP cannot request a Substitute Schedule F as stated above, additional 

information requested by the AIP and provided by the insured could affect the insured’s eligibility for 

a WFRP policy under section 3 of the 2018 WFRP Pilot Policy that requires cancellation of the policy 

or at the very least, denial or adjustments to coverage per sections 15(i) or (j) of the policy.

In accordance with section 33(a)(1) of the WFRP Pilot Policy, this FCIC interpretation is generally 

applicable and binding in any mediation or arbitration. In accordance with section 33(a)(1), any 

appeal of this interpretation must be in accordance with 7 C.F.R. part 11.