FARM PROGRAMS

Additional Steps 

Needed to Help 

Prevent Payments to 

Participants Whose 

Incomes Exceed 

Limits

Report to the Chairwoman, Committee 

on Agriculture, Nutrition and Forestry, 

U.S. Senate

August 2013

GAO-13-741

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-741, a report to the 

Chairwoman, Committee on Agriculture, 

Nutrition and Forestry, U.S. Senate 

August 2013

FARM PROGRAMS

Additional Steps Needed to Help Prevent Payments 

to Participants Whose Incomes Exceed Limits

Why GAO Did This Study

In light of high farm incomes and 

constrained federal budgets, the cost 

of federal farm and conservation 

programs—about $15 billion annually 

from 2009 through 2012—has come 

under scrutiny. Under the 2008 Farm 

Bill, participants whose incomes 

exceed specific limits are ineligible for 

certain program payments. USDA’s 

FSA makes income eligibility 

determinations for programs it 

administers and also for conservation 

programs administered by NRCS. FSA 

verifies that participants have incomes 

below the limits by reviewing either tax 

returns (with consent from participants) 

or statements from accountants or 

attorneys. GAO was asked to review 

FSA’s income verification practices. 

This report examines FSA’s (1) review 

of tax returns and (2) review of 

accountants’ and attorneys’ statements 

and (3) FSA’s and NRCS’s recovery of 

payments to participants who 

exceeded income limits. GAO 

reviewed 115 tax return files and 

163 files with accountants’ and 

attorneys’ statements from 18 FSA 

state offices selected to reflect 

geographic and program diversity, 

analyzed agency data, and interviewed 

agency officials.

What GAO Recommends

To reduce the risk of improper 

payments to participants whose 

incomes exceed statutory limits, 

Congress should consider simplifying 

those limits. GAO recommends that 

FSA monitor state office reviews of tax 

returns and accountants’ and 

attorneys’ statements and implement a 

process to verify that these statements

accurately reflect incomes. USDA 

generally agreed with GAO’s findings 

and recommendations.

What GAO Found

As part of verifying if farm and conservation program participants had incomes 

below statutory limits—making them eligible to receive certain 2009 and 2010 

program payments—reviews of tax returns by the U.S. Department of 

Agriculture’s (USDA) Farm Service Agency’s (FSA) state offices varied in quality. 

GAO’s review of 115 tax return files from selected state offices found that some 

files met agency guidance and had no apparent errors. Other files did not meet 

agency guidance or contained errors, resulting in some potentially improper 

payments to participants whose incomes exceeded the limits. For example, GAO 

found errors in 19 of the 22 tax return files it reviewed from FSA offices in two 

states; one of these errors led to a potentially improper payment of $40,000. FSA 

headquarters does not monitor state offices’ reviews of tax returns to ensure that 

the offices are applying program guidance consistently and making accurate 

eligibility determinations, even though federal standards for internal control direct 

agencies to monitor and assess the quality of performance over time. Also, 2008 

Farm Bill provisions requiring a distinction between farm and nonfarm income 

make it difficult for agency officials to verify if participants’ incomes exceed the 

limits without making errors. Because the statutory limits for farm and nonfarm 

income differ, to verify such income, FSA officials must comb through sometimes 

long and complex tax returns to classify and calculate income—a difficult task for 

those who are not accountants or tax preparers. Recent bills in the House and 

Senate have proposed using total adjusted gross income instead of farm and 

nonfarm income, which would reduce the need for FSA to review tax returns.

When relying on accountants’ and attorneys’ statements to verify participants’ 

incomes for 2009 and 2010, FSA state offices sometimes accepted statements 

that did not meet agency guidance or contained errors, resulting in some 

questionable eligibility determinations and potential payments to participants 

whose income exceeded statutory limits. GAO’s review of 163 files with 

accountants’ and attorneys’ statements from selected state offices found that 

some state offices followed FSA’s guidance in full, but others sometimes did not. 

For example, 14 of the 16 statements GAO reviewed from one FSA state office 

met agency guidance, whereas 21 of the 39 statements GAO reviewed in two 

other state offices did not. In addition, some accountants’ and attorneys’ 

statements contained errors, such as miscalculations of average income. FSA’s 

headquarters does not monitor its state offices to ensure that they accept only 

statements meeting agency guidance or verify the accuracy of participants’ 

income in these statements by reviewing supporting documentation. As a result, 

FSA cannot be assured that the statements are accurate or that payments are 

being made only to participants whose incomes fall below statutory limits.

FSA and USDA’s Natural Resources Conservation Service (NRCS) are each 

responsible for recovering any payments made by their respective programs to 

ineligible participants. In May 2012, FSA started to recover about $143 million in 

overpayments made to its participants in 2009 and 2010, but NRCS has not 

identified the amount of overpayments made or begun recovering payments it 

made to ineligible participants, because it had to first update project management 

software in February 2013. NRCS issued new guidance with procedures for 

identifying and collecting overpayments that were made and expects to send 

letters by September 2013 seeking reimbursement of overpayments.

View GAO-13-741. For more information, 

contact Daniel Garcia Diaz at (202) 512-3841 

or garciadiazd@gao.gov.
Page i GAO-13-741 Farm Income Limits

Letter 1 

Background 5

FSA State Offices’ Reviews of Tax Returns Vary in Quality and 

Have Led to Some Erroneous Eligibility Determinations 13

FSA’s Review of Accountants’ and Attorneys’ Statements Cannot 

Ensure That Participants Receiving Payments Comply with 

Income Limits 21

FSA Is Recovering Overpayments, but the Natural Resources 

Conservation Service Has Not Begun to Do So 26

Conclusions 30

Matter for Congressional Consideration 31

Recommendations for Executive Action 31

Agency Comments and Our Evaluation 31

Appendix I Objectives, Scope, and Methodology 34

Appendix II Farm and Conservation Program Income Limits in the 

2008 Farm Bill 38

Appendix III Information on NRCS and FSA Waivers of Statutory Income 

Limit for Conservation Payments, 2009 and 2010 41

Appendix IV Number of Farm and Conservation Program Participants 

Ineligible Because of Income Limits, 2009 and 2010 43

Appendix V Farm Program Participants Determined to Be Eligible for 

Direct Payments in 2009 and 2010 48

Appendix VI Comments from the Department of Agriculture 52

Contents 
Page ii GAO-13-741 Farm Income Limits

Appendix VII GAO Contact and Staff Acknowledgments 54

Related GAO Products 55

Tables

Table 1: Income Limits for Farm and Conservation Programs 38

Table 2: Natural Resources Conservation Service and Farm Service 

Agency Waivers of Statutory Income Limit and Their 

Associated Conservation Payments, 2009 and 2010 41

Table 3: Farm and Conservation Program Participants Found to Be 

Ineligible in 2009, by State 43

Table 4: Farm and Conservation Program Participants Found to Be 

Ineligible in 2010, by State 45

Table 5: Participants Determined to Be Eligible for Direct 

Payments in 2009, by State 48

Table 6: Participants Determined to Be Eligible for Direct 

Payments in 2010, by State 49

Figures

Figure 1: Farm Service Agency’s (FSA) Process for Determining If 

Participants’ Incomes Exceed Statutory Limits 8

Figure 2: Fraction of Participants Receiving Farm and 

Conservation Payments in 2010 Whose Incomes Exceeded 

Limits 12

Figure 3: Percentage of Farm Program Participants Whose Files 

Were Reviewed by Selected Farm Service Agency (FSA) 

State Offices and Who Were Determined to Be Eligible for 

Certain 2010 Payments 18
Page iii GAO-13-741 Farm Income Limits

Abbreviations

FSA Farm Service Agency

IRS Internal Revenue Service

NRCS Natural Resources Conservation Service

USDA U.S. Department of Agriculture

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Page 1 GAO-13-741 Farm Income Limits

441 G St. N.W.

Washington, DC 20548

August 29, 2013

The Honorable Debbie Stabenow

Chairwoman

Committee on Agriculture, Nutrition and Forestry

United States Senate

Dear Madam Chairwoman:

Under federal farm and conservation programs from 2009 through 2012, 

about 1.4 million participants received about $15 billion annually in 

payments for crop subsidies, disaster assistance, and conservation 

practices.1 During the same period, while most of the nation was in the 

midst of an economic downturn, overall farm income levels increased 

dramatically. The U.S. Department of Agriculture (USDA) reported that 

net farm income was $63 billion in 2009, generally rose through 2012, 

and is projected to reach a record $128 billion in 2013—more than double 

net farm income in 2009. In light of high farm incomes and rising federal 

budget deficits, the costs to the federal government of farm and 

conservation programs have come under heightened scrutiny. In 

particular, members of Congress and others have raised questions about 

whether some payments may be going to participants who are not eligible 

to receive them. By law, participants in certain farm and conservation 

programs are ineligible for payments if their incomes exceed specific 

limits. Within USDA, the Farm Service Agency (FSA)—through the 

agency’s network of headquarters, state, and county offices—is 

responsible for administering the bulk of farm program payments, and the 

Natural Resources Conservation Service (NRCS) administers payments 

for most conservation programs.2

The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) 

establishes the current income limits for many farm and conservation 

programs. Separate limits apply to farm income and nonfarm income; 

 

1

Throughout this report, we use the term participants to refer to individuals as well as 

entities, such as corporations, estates, and trusts, that receive farm and conservation 

payments.

2

FSA is responsible for administering the Conservation Reserve Program and other 

conservation programs as well.

 
 

Page 2 GAO-13-741 Farm Income Limits

both limits are based on adjusted gross income (or a comparable 

measure) as defined in the Internal Revenue Code and averaged over the 

3 most recent tax years. Specifically, a participant is ineligible to receive 

payments under some farm programs if his or her average adjusted gross 

nonfarm income exceeds $500,000 and to receive another type of 

payment if his or her average adjusted gross farm income 

exceeds $750,000.3 A participant is ineligible to receive conservation 

payments if his or her average adjusted gross nonfarm income exceeds 

$1 million, unless at least 66.66 percent of his or her average adjusted 

gross income is derived from average adjusted gross farm income.4

In October 2008, we reported that from 2003 through 2006, FSA paid 

nearly $50 million under farm programs to participants whose incomes 

may have exceeded the income limit at that time ($2.5 million annually 

per individual or entity), potentially making them ineligible.5 These 

payments occurred primarily because FSA did not have management 

controls, such as reviews of an appropriate sample of recipients’ tax 

returns, to verify that payments were going only to participants who did 

not exceed the income limit. We recommended that FSA work with the 

Internal Revenue Service (IRS) to develop a system to identify 

participants potentially exceeding income limits. In response to our 

recommendation, FSA and IRS implemented an income verification 

process in 2009. Under the new process, IRS identifies participants 

potentially exceeding the income limits, and FSA reviews information 

submitted by the participants to make eligibility determinations. 

Specifically, participants submit to FSA for review either (1) tax returns or 

(2) accountants’ or attorneys’ statements certifying the participants’ 

income levels. For both FSA and NRCS programs, FSA is responsible for 

determining whether participants have incomes exceeding the limits.6

Once FSA makes a determination, FSA and NRCS are each responsible 

 

3

Specifically, participants are ineligible for payments known as direct payments if their 

farm incomes exceed $750,000. Direct payments are fixed annual sums based on a 

farm’s historical production of particular commodity crops.

4

Pub. L. No. 110-246 § 1604(a), 110 Stat. 1651, 1741 (amending 7 U.S.C. § 1308-3a(b)). 

5

GAO, Federal Farm Programs: USDA Needs to Strengthen Controls to Prevent 

Payments to Individuals Who Exceed Income Eligibility Limits, GAO-09-67 (Washington, 

D.C.: Oct. 24, 2008).

6

FSA determines for both agencies whether participants’ incomes exceed limits, but FSA 

does not make determinations of participants’ eligibility for NRCS programs.
 

Page 3 GAO-13-741 Farm Income Limits

for recovering any payments made to ineligible participants by their 

respective programs.

In this context, you asked us to assess FSA’s implementation of a 

process to verify that participants’ incomes complied with statutory limits 

for receiving farm and conservation payments. This report examines 

(1) FSA’s review of participants’ tax returns to verify that participants 

receiving payments do not exceed income limits, (2) FSA’s review of 

accountants’ and attorneys’ statements to verify participants’ incomes, 

and (3) FSA’s and NRCS’s recovery of overpayments to participants 

determined to have exceeded income limits.

To address these objectives, we reviewed FSA and NRCS files, analyzed 

agency data, interviewed agency officials, and reviewed and updated our 

past work. Specifically, to examine FSA’s review of participants’ tax 

returns and accountants’ and attorneys’ statements to verify participants’ 

incomes for 2009 and 2010 (the most recent years for which data were 

available), we reviewed 278 FSA files from 18 FSA state offices. We first 

selected a nonprobability sample of 18 state offices to reflect diversity 

with respect to number of income eligibility reviews conducted by the 

office, size and type of farm and conservation programs, and geographic 

location. Eight of these 18 state offices had reviewed 30 or more files. For 

these 8, we drew a random sample of 20 to 30 files from each office for 

our review. The other 10 state offices in our sample had reviewed fewer 

than 30 files, so we selected all of them for our review. In each of our 

original random samples, half the files contained tax returns, half 

contained accountants’ and attorneys’ statements, and both groups 

contained determinations of both eligibility and ineligibility. Because this 

random sample of files was based on preliminary data from the agency, 

the proportions of files with tax returns versus accountants’ and attorneys’ 

statements changed during our work; in all, we reviewed 115 files that 

contained tax returns and 163 files that contained accountants’ and 
 

Page 4 GAO-13-741 Farm Income Limits

attorneys’ statements.7 We reviewed the files to evaluate the state offices’ 

compliance with agency guidance and to understand the offices’ rationale 

for their eligibility determinations. Our sampling methods do not allow our 

results to be generalized to all 51 FSA state offices nationwide or to a 

single state office (except in cases where we selected all the files). 

Nevertheless, by providing examples, the information from these files 

enhanced our understanding of FSA’s income verification process.

In addition to reviewing files from selected FSA state offices, we collected 

nationwide FSA data on the agency’s process for determining income 

eligibility. To assess the reliability of these data, we (1) performed 

electronic testing of required data elements, (2) reviewed existing 

information about the data and the system that produced them, and

(3) interviewed agency officials knowledgeable about the data. We found 

these data to be sufficiently reliable for purposes of this report. We 

analyzed FSA’s data to identify any differences among state offices in 

rates of determinations of eligibility. We also interviewed FSA 

headquarters officials and officials in eight state offices, which had 

reviewed more than 30 files, to understand the agency’s policies, 

procedures, and practices for determining participants’ eligibility. To 

examine FSA’s recovery of overpayments to participants determined to 

have exceeded income limits in 2009 and 2010, we collected nationwide 

FSA data on payment amounts to be recovered and interviewed agency 

officials about policies, procedures, and practices used to recover such 

payments. We again assessed the reliability of the data through a review 

of the system that generated the data, as well as other steps, and 

determined that they were reliable for purposes of this report. To examine 

NRCS’s payment recovery process, we reviewed agency guidance and 

relevant reports by the USDA Office of Inspector General, and we 

interviewed agency officials in headquarters and state offices. Appendix I 

describes our objectives, scope, and methodology in more detail.

 

7

Participants may choose to send either (1) tax returns or (2) accountants’ or attorneys’ 

statements to support their eligibility for farm and conservation payments. As a result, a 

given FSA state office does not necessarily review both types of files. Thirteen of the 

18 FSA state offices in our sample had reviewed both types of files, and all 18 had 

reviewed files containing accountants’ and attorneys’ statements. The 13 state offices that 

had reviewed both types of files were in Arkansas, California, Connecticut, Indiana, 

Kansas, Louisiana, Missouri, Nevada, New Jersey, Ohio, Texas, Vermont, and West 

Virginia. The 5 state offices that had reviewed files containing only accountants’ or 

attorneys’ statements were in Hawaii, Maine, Massachusetts, New Hampshire, and Rhode 

Island.
 

Page 5 GAO-13-741 Farm Income Limits

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.

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 

 

8

Adjusted 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.

Background 
 

Page 6 GAO-13-741 Farm Income Limits

gross farm income and be eligible for most farm payments, or up to 

$2 million in average adjusted gross nonfarm income and be eligible for 

conservation payments. The 2008 Farm Bill specifies that certified public 

accountants (or others designated by USDA) may provide a statement 

certifying an allocation of income between individuals who file a joint tax 

return, as if they had filed separately. The 2008 Farm Bill also allows 

USDA to waive the income limit for conservation payments in cases 

involving “environmentally sensitive land of special significance.”9

According to NRCS documents, the agency waived the income limit 

4 times in 2009 and 15 times in 2010, to approve conservation contracts 

for about $89 million in total to be paid over multiple years. FSA also 

waived the income limit 12 times in 2010, to approve conservation 

contracts together granting about $80,000 to be paid in 2010 and 

additional amounts to be paid over multiple years.10 See appendix II for a 

more detailed description of the 2008 Farm Bill’s income limits and 

appendix III for more details about NRCS’s and FSA’s waivers.

The 2008 Farm Bill directs the Secretary of Agriculture to include income 

related to the following categories, among others, when determining 

average adjusted gross farm income:

• production, feeding, and rearing of livestock;

• production of products derived from or produced by livestock;

• production of crops and unfinished raw forestry products;

• processing, packing, storing, and transporting of farm, ranch, and 

forestry commodities, including renewable energy;

• sale of land that has been used for agriculture;

• sale of easements of farmland, ranchland, or forestry land; water or 

hunting rights; or environmental benefits;

• rental or lease of land or equipment used for farming, ranching, or 

forestry operations, including water or hunting rights;

• production of farm-based renewable energy; and

• sale of equipment to conduct farm, ranch, or forestry operations, if 

average adjusted gross farm income is at least two-thirds of a 

participant’s average adjusted gross income.

 

9

Pub. L. No. 110-246 § 1604(a), 110 Stat.1651, 1742 (amending 7 U.S.C. § 1308-

3a(b)(2)(A)(ii)). 

10In 2009, FSA approved three waivers but did not enter into any related contracts. The 

waivers FSA approved in 2010 were for multiyear contracts, but the agency could not 

readily provide us the total, multiyear value of these contracts.
 

Page 7 GAO-13-741 Farm Income Limits

Nonfarm income is defined as total income minus farm income. Appendix 

II also includes a more detailed description of the 2008 Farm Bill’s 

definitions of farm income and nonfarm income.

In October 2008, we reported that FSA could not ensure that all 

individuals receiving farm payments had incomes below eligibility limits 

because the agency’s management controls were not targeted to provide 

such assurance.11 From 2003 through 2008, to ensure that only eligible 

individuals received farm payments, either directly or as members of 

entities, FSA relied on participants’ one-time self-certifications that they 

met income eligibility requirements and the participants’ promises to notify 

FSA if they no longer met these requirements. As we reported, however, 

these self-certifications did not always prove sufficient, and FSA’s 

principal management control—a review of a sample of program 

participants to verify compliance with income limits—did not routinely 

target high-income participants. In the 2008 Farm Bill, Congress directed 

the Secretary of Agriculture to establish statistically valid procedures to 

conduct targeted audits of participants the Secretary determines to be 

most likely to exceed the legislation’s income limits. Consistent with this 

provision and our findings, we recommended that FSA work with IRS to 

develop a system for verifying income eligibility for all recipients of farm 

payments.

In 2009, USDA and IRS signed a memorandum of understanding, 

launching for the first time a process in which IRS screens participants

initially to identify those whose incomes may exceed limits, and FSA 

makes an eligibility determination, as shown in figure 1.

 

11GAO-09-67. 
 

Page 8 GAO-13-741 Farm Income Limits

Figure 1: Farm Service Agency’s (FSA) Process for Determining If Participants’ Incomes Exceed Statutory Limits

IRS and FSA implemented this process for 2009 and 2010, and in March 

2013, FSA began the process for 2011 and 2012. Specifically, the 

process starts when participants provide consent for IRS to disclose 
 

Page 9 GAO-13-741 Farm Income Limits

certain tax-related information to FSA to verify that they meet applicable 

income limits.12 For 2009 and 2010, farm and conservation program 

participants were to complete a self-certification form saying they met 

income limits and a consent form for IRS to release limited tax 

information; for participants who completed both forms, IRS used its tax 

database to estimate farm income and nonfarm income according to 

USDA instructions. IRS computer programs compared these income 

estimates against the 2008 Farm Bill’s income limits to identify 

participants who may have exceeded these limits, and IRS provided the 

resulting list to FSA.13 The agency then notified potentially ineligible 

participants by mail and gave them the opportunity to provide 

documentation if they believed their income did not exceed the eligibility 

limits. According to FSA’s handbook on determining eligibility for farm 

payments, participants can provide to FSA state offices (1) tax returns for 

the 3 most recent years, (2) accountants’ or attorneys’ statements 

certifying the participants’ income levels for these 3 years, or (3) an 

acknowledgment that their income exceeded the limits for the year or 

years in question.14 For couples who file joint tax returns, FSA state 

offices are to use the joint income levels to make eligibility 

determinations, unless a certified public accountant or attorney provides a 

statement detailing what each individual’s income would have been had 

the couple filed separate tax returns. FSA state offices are then to review 

the tax returns and accountants’ and attorneys’ statements to determine 

whether each individual was eligible under the statutory income limits. 

FSA state offices deem ineligible those participants who (1) provide an 

acknowledgment that their incomes exceeded the limits or (2) do not 

respond at all. After state offices make a determination about participants’ 

 

12IRS does not provide to FSA dollar amounts of income reported on participants’ tax 

returns, average income amounts, or determinations of participants’ eligibility. Information 

that FSA receives from IRS is stored in a secure database, only accessible to authorized 

personnel, used only in the income verification process, and not subject to release under 

the Freedom of Information Act.

13For two reasons, IRS’s lists of participants whose incomes may exceed 2008 Farm Bill 

income limits may also include participants whose incomes do not, in fact, exceed those 

limits: (1) IRS does not allocate income to individual participants from taxpayer returns 

when couples file joint returns, and (2) IRS does not always classify farm income and 

nonfarm income the same way that FSA does to determine participants’ eligibility for 

payments because the two agencies’ definitions of farm income and nonfarm income 

differ.

14USDA, Farm Service Agency, FSA Handbook: Payment Eligibility, Payment Limitation, 

and Average Adjusted Gross Income, 4-PL, Amendment 16 (Washington, D.C.: 2012).
 

Page 10 GAO-13-741 Farm Income Limits

eligibility, they send letters to the participants notifying them of their 

eligibility, enter the eligibility status into the agency’s database, and follow 

agency procedures for recovering any overpayments. In addition, FSA 

state offices inform their state-level NRCS counterparts of participants 

who were determined to have exceeded income limits for conservation 

programs, so that NRCS can recover any overpayments made to 

participants in its programs. In February 2013, USDA’s Office of Inspector 

General reported that NRCS needed to strengthen its efforts to ensure 

that program benefits reach only eligible participants and serve their 

intended purposes.15 Moreover, the Inspector General found that NRCS 

has had long-standing problems with verifying participants’ eligibility.

For 2009, 2010, and 2011, FSA also worked with IRS to identify 

participants who (1) had received farm or conservation payments but had 

not completed a consent form allowing IRS to share limited information 

with FSA or (2) had completed a consent form but had had the form 

rejected because, for example, the name on the form did not precisely 

match the name in IRS’s database.16 According to FSA’s handbook, 

participants who choose not to submit a consent form are ineligible for 

farm and conservation programs subject to income limits and must refund 

all payments received under these programs.17 For the 3 years, FSA 

initially identified over 400,000 participants lacking consent forms. FSA 

state and county offices sent letters to these participants notifying them 

that they needed to return a completed consent form. About 28,000 

participants either did not provide the forms for 2009, 2010, and 2011 or 

acknowledged that their income exceeded the limits for those years, and 

FSA determined them to be ineligible for the farm and conservation 

payments subject to income limits.

 

15USDA, Office of Inspector General, Natural Resources Conservation Service’s 

Oversight and Compliance Activities, 10601-0001-22 (Washington, D.C.: Feb. 7, 2013).

16USDA reimburses IRS annually for services related to the income verification process, 

including accessing tax information, executing required calculations and comparisons, and 

transferring electronic data to FSA. In August 2013, USDA reported that since 2009, it had 

paid IRS $8.69 million for these services.

17Beginning with 2012, FSA used a single form for participants to certify their compliance 

with income limits and consent for IRS to disclose certain tax-related information to FSA. 

The certification form must be on file for a participant to receive any payments, so using 

only one form for both purposes helps ensure that participants do not receive payments 

without submitting a consent form.
 

Page 11 GAO-13-741 Farm Income Limits

Considering 2010 alone, out of all participants receiving farm or 

conservation payments that year, FSA determined that less than 

1 percent were ineligible to receive farm payments, conservation 

payments, or both. Specifically, in 2010 about 1.4 million participants 

received farm and conservation payments subject to income limits (see 

fig. 2). Of these 1.4 million participants, IRS identified about 15,500 as 

having incomes potentially exceeding the limits, and FSA identified 

another 90,000 who had no consent forms for that year. Of the IRSidentified participants, FSA found some to be ineligible for farm and 

conservation payments because they either acknowledged that their 

incomes exceeded the limits or did not respond to FSA’s letter notifying 

them that their incomes may have exceeded the limits. For other IRSidentified participants, FSA reviewed additional documentation and 

determined that some were ineligible because their incomes exceeded 

one or more limits.18 Among the IRS-identified participants all together, 

FSA found about 6,000 participants to be ineligible. In addition, of the 

90,000 participants FSA initially identified as having no consent forms, 

about 7,000 did not provide the forms, and FSA determined them to be 

ineligible. In total, FSA determined about 13,000 participants to be 

ineligible for 2010 farm and conservation payments. See appendix IV for 

more details.

 

18About 1,800 of the 15,500 participants identified by IRS were ineligible for conservation 

payments because their nonfarm incomes exceeded $1 million.
 

Page 12 GAO-13-741 Farm Income Limits

Figure 2: Fraction of Participants Receiving Farm and Conservation Payments in 

2010 Whose Incomes Exceeded Limits

Congress has begun deliberations over the next farm bill, and proposals 

revising farm and conservation program income limits have been made. 

In particular, in June 2013, the Senate passed one version of a farm bill—

the Agriculture Reform, Food, and Jobs Act of 2013 (S. 954)—and in July 

2013, the House of Representatives approved another version—the 

Federal Agriculture Reform and Risk Management Act of 2013 (H.R. 

2642)—both with income limit provisions. Although neither bill has 
 

Page 13 GAO-13-741 Farm Income Limits

become law, both bills provide further insights into congressional 

deliberations over the next farm bill. For example, both bills eliminate the 

distinction between farm income and nonfarm income and establish a 

single limit on total adjusted gross income for most farm programs, 

simplifying implementation of the income limits as a result. Simplifying the 

income limits might affect the universe of participants eligible for farm and 

conservation payments.19 The Senate bill set a limit of $750,000, and the 

House bill set a limit of $950,000. As with current income limits, these 

limits would apply to individuals, so under certain conditions a husband 

and wife could collectively have an income of up to $1.5 million under the 

Senate bill or up to $1.9 million under the House bill. In addition, the 

Senate bill included a provision that would reduce subsidies for crop 

insurance premiums by 15 percentage points for participants with 

average adjusted gross income over $750,000.20

When determining if participants’ incomes fell below the limits, qualifying 

them for 2009 and 2010 farm payments, FSA state offices did not always 

review tax returns according to agency guidance and sometimes made 

errors when calculating and classifying income, or they relied on 

insufficient documentation. As a result, FSA state offices may have made 

some erroneous determinations of participants’ eligibility or ineligibility, 

resulting in some potentially improper payments to ineligible participants 

whose incomes exceeded the limits. The absence of FSA monitoring of 

state offices’ reviews, as well as complex income eligibility policies, both 

contribute to variation in quality of reviews performed by state offices.

 

19According to the Congressional Research Service, the Senate bill would tighten the 

income limit for most individuals, but it could restore program eligibility for some 

individuals with nonfarm incomes from $500,000 to $750,000 if their farm incomes are 

low. The House bill would tighten the income limit for some individuals, and for other 

individuals, it could restore program eligibility.

20USDA administers the federal crop insurance program in partnership with private 

insurance companies. Under the program, participants can insure against losses caused 

by poor crop yields, declines in crop prices, or both for each insurable crop they produce. 

In 2012, the program provided about $117 billion in insurance coverage for over 1 million 

policies. Program costs include subsidies to pay for part of participants’ premiums.

FSA State Offices’ 

Reviews of Tax 

Returns Vary in 

Quality and Have Led 

to Some Erroneous 

Eligibility 

Determinations 
 

Page 14 GAO-13-741 Farm Income Limits

To help ensure accuracy of payments, FSA developed new guidance in 

its handbook on how to determine eligibility for farm payments, detailing 

procedures its state offices are to follow when reviewing tax returns to 

verify participants’ incomes. According to the handbook, for each 

participant under review in 2009 and 2010, state offices were to maintain 

a file containing all of the following documents:

• copies of complete tax returns received from the participant for all 

relevant years;

• printout showing eligibility status recorded in FSA’s database before 

state office review;

• copies of the original self-certification forms submitted by the 

participant;

• calculation worksheets for average farm income and nonfarm income 

for 2009, 2010, or both years;

• printout showing updated eligibility status recorded in FSA’s database 

after state office review, if changed; and

• copy of the letter notifying the participant of the agency’s final 

eligibility determination.

The handbook also includes guidance about where to find and how to 

calculate total income, farm income, and nonfarm income using various 

IRS tax forms. For farm income, the handbook lists some of the IRS 

schedules, forms, and line numbers where farm income may be reported, 

but the list is not comprehensive because reporting farm income and 

preparing tax returns may be done in many acceptable ways. The 

handbook also includes information on the definition of farm income, so 

officials can discern which items to classify as farm income, even if the 

items are not reported on the specified forms and on line numbers listed 

in the handbook. To help FSA officials calculate total and average farm 

income and nonfarm income for the 3 most recent tax years, the 

handbook includes a step-by-step worksheet where officials can enter 

dollar amounts from tax returns for each of the 3 years, then perform 

calculations as directed, and ultimately arrive at an eligibility 

determination for each applicable income limit. In addition to the 

handbook, for FSA’s 2009 and 2010 income verification process, 

headquarters officials provided training briefings to state officials before 

they began reviewing tax returns, to help ensure that state officials 

understood and followed agency guidance.

In our reviews of 115 tax return files maintained by 13 selected FSA state 

offices for 2009 and 2010, we found many files that were complete or 

nearly complete, with clear documentation of the rationale behind 

FSA State Offices Did Not 

Always Follow Guidance 

and Sometimes Made 

Errors When Reviewing 

Participants’ Tax Returns
 

Page 15 GAO-13-741 Farm Income Limits

eligibility determinations and no apparent errors. For example, 24 of the 

25 files we reviewed from the California and Texas state offices contained 

the self-certification forms, calculation worksheets, and notification letters 

specified in guidance. In addition, 11 of the 12 tax return files we 

reviewed from the Arkansas state office were nearly complete and 

included thorough records—for example, including e-mail exchanges with 

headquarters officials to verify proper classification of farm income in 

unusual cases. Further, some state offices, including those in Arkansas 

and Texas, developed their own, more detailed calculation worksheets to 

track and sum individual farm income amounts reported on specific 

schedules and forms for each year, rather than record only the total 

annual amounts, as indicated on the handbook’s worksheet. The more 

detailed worksheets furnished a transparent record of which income 

sources officials classified as farm income or nonfarm income each year 

and of how they calculated average farm income and nonfarm income for 

the 3-year period—a clear picture of the steps officials took to determine 

participants’ eligibility.

In contrast, files from some state offices were routinely missing some of 

the documentation specified in FSA’s handbook. For example, 39 of the 

41 tax return files we reviewed from the Indiana, Kansas, and Missouri 

state offices were missing the original self-certification forms provided by 

participants, and 38 of the 41 files were missing printouts showing that 

the eligibility determination had been correctly entered into FSA’s 

database. Also, 8 of the 9 files we reviewed from the Louisiana state 

office were missing calculation worksheets. Without all the specified

documents—including the printout showing the eligibility determination in 

FSA’s database—FSA cannot be assured that all of its state offices’ 

determinations of participants’ eligibility are correct and accurately 

recorded. Accurate recording of participants’ eligibility status in the 

agency’s database is of particular importance because it is the first step in 

recovering payments made to ineligible participants; if the status of 

ineligible participants is not accurately recorded, improper payments may 

not be identified or recovered.

In addition, some tax return files we reviewed also included FSA state 

officials’ errors in classifying and calculating farm income and nonfarm 

income, raising questions about FSA’s confidence that participants 

receiving payments do not exceed income limits. For example, in some 

files FSA state officials incorrectly counted income from dividends or the 

sale of a house as farm income or incorrectly counted income from the 

sale of livestock, farmland, or timber as nonfarm income. In other files, 

FSA state officials used income from the wrong line number on an IRS 
 

Page 16 GAO-13-741 Farm Income Limits

form (e.g., the line listing gross rather than net income), made errors 

calculating average farm income and average nonfarm income, or 

calculated income amounts that we could not verify. In FSA’s California 

office, we found potential errors or misclassifications in 9 of the 11 tax 

return files we reviewed, and in the Indiana office, we found such issues 

in 10 of the 11 files we reviewed. For example, in 1 file FSA state officials 

incorrectly counted a sale of farmland as nonfarm income and 

erroneously determined the participant to be eligible for farm payments 

when he should have been ineligible. In another file involving a farming 

corporation under review, FSA state officials properly classified income 

from the corporation’s farm operation as farm income in 2 of the 3 years 

under review but classified income from the same source erroneously as 

nonfarm income in the third year. As a result, the corporation received 

about $40,000 in 2010 farm payments that it should not have.

Moreover, FSA state officials sometimes counted income as farm income 

without asking for corroborating information, leading to potential errors. 

For example, officials could not always tell from a tax return whether a 

parcel of sold land had been used for agriculture and whether gains from 

the sale should therefore be counted as farm income. In some cases, 

officials counted sales of such land as farm income (e.g., some officials 

told us they did so if the parcel’s address was in a predominantly rural 

county or if the reviewing official knew about the participant’s 

circumstances). In other cases, absent explicit evidence on the tax return 

that a parcel had been used for agricultural purposes, officials said they 

counted such sales as nonfarm income, and in still other cases, the 

officials said they required documentation of the parcel’s use before 

deciding. Neither the FSA handbook nor the training provided by agency 

headquarters addresses how state offices should handle this issue, but 

according to a headquarters official, a sale of land should be classified as 

nonfarm income unless the tax return includes explicit evidence that the 

sold land is farmland or the participant provides documentation showing 

the property’s classification as farmland.

Further, in some files we reviewed, FSA state officials allocated joint 

income to individuals, even though neither the 2008 Farm Bill nor agency 

guidance directs the agency to do so. For example, in the Indiana state 

office, agency officials allocated joint income to individuals, determining 

one or both individuals to be eligible for farm payments, in eight of the 

nine files we reviewed in which FSA made decisions on the basis of joint 

tax returns. As a result, these individuals received payments in 2009 and 

2010, totaling about $56,000, which they would not have received if state 

officials had based their determinations on the income reported in 
 

Page 17 GAO-13-741 Farm Income Limits

participants’ tax returns, as called for in the handbook. In one California 

file we reviewed, FSA state officials also allocated joint income to 

individuals, resulting in payments to one individual who would not 

otherwise have received the payments.

In interviews, FSA state officials described taking different approaches to 

reviewing tax returns and, in some instances, handling similar cases in 

different ways. For example, some state offices delegated reviewing tax 

returns to officials who had experience in the area, such as farm loan 

specialists, and in other state offices, officials who had little or no 

experience with tax returns performed the reviews. Also, in some states, 

FSA officials said they reviewed every page of each tax return they 

received, and in other states, agency officials said they did not always 

review a participant’s entire tax return for each year. Instead, in cases 

where a participant’s nonfarm income had potentially exceeded the limit, 

some agency officials reviewed the tax returns page by page until they 

had classified enough income as farm income to bring the participant’s 

nonfarm income below the limit and did not review the remaining pages 

because, the officials said, they had limited time and resources. The 

remaining, unreviewed pages, however, could have contained income 

information that might have affected the participant’s eligibility. Officials in 

one state office said they counted as farm income only the amounts 

reported on the specific schedules and line numbers listed in FSA’s 

handbook. In another state office, officials said they usually reviewed the 

first page of each year’s tax return and did not look further unless 

something caught their attention. Agency officials in three states said that, 

for each tax return file, one official reviewed the documents and made an 

initial determination of the participant’s eligibility, and a second official 

reviewed the file again to verify the accuracy of the determination. 

Officials in other states said a single person reviewed each file because 

of limited staff.

In addition, our analysis of data that FSA maintains for all state offices 

during the income verification process—including data on the 

determinations of the 27 state offices with more than 100 reviews of 

participants’ eligibility to receive farm payments for 2010—identified 

variation across state offices in the percentage of participants determined 

to be eligible (see fig. 3). In particular, FSA tracks the number of 

participants identified by IRS as potentially exceeding income limits and, 

of these, the number determined eligible or ineligible after review by state 

offices. According to eligibility data for 2010, the percentage of 

participants that state offices determined to be eligible ranged from 

26 percent in Ohio to 79 percent in Arizona. It is unclear, however, 
 

Page 18 GAO-13-741 Farm Income Limits

whether the large variation across state offices in these percentages 

stems from variation in the quality of the state offices’ reviews or from 

something else. A reason for this uncertainty is that FSA officials were not 

able to determine the extent to which variation in quality of reviews 

contributed to the different percentages of participants that state offices 

deemed eligible. For more details on FSA’s eligibility data and 

percentages of participants determined to be eligible, by state office, see 

appendix V.

Figure 3: Percentage of Farm Program Participants Whose Files Were Reviewed by Selected Farm Service Agency (FSA) 

State Offices and Who Were Determined to Be Eligible for Certain 2010 Payments

Note: Figure includes only states with more than 100 total reviews of participants’ eligibility by income 

for 2010 farm program direct payments, which are fixed annual payments based on farms’ historical 

crop production and accounted for the largest dollar amounts that year. FSA did not make a 

determination of participants’ eligibility for these payments in all cases—for example, because some 

participants received no direct payments. We calculated percentages of participants determined to be 

eligible using only those cases in which FSA made a determination of eligibility for direct payments.
 

Page 19 GAO-13-741 Farm Income Limits

FSA headquarters does not monitor state office reviews of tax returns to 

ensure that the offices are applying program guidance consistently and 

making accurate eligibility determinations on the basis of participants’ 

incomes. One of the federal standards for internal control directs 

agencies to conduct monitoring to assess the quality of performance over 

time and ensure that any deficiencies are promptly resolved,21 and regular 

monitoring of the quality and completeness of state offices’ reviews can 

help prevent payments to participants who exceed income limits. Such 

monitoring would allow FSA to identify problem areas (e.g., if some state 

offices consistently misapply guidance), implement improvements to 

address problems, and help hold state offices accountable for accurate 

determinations of participants’ eligibility to receive payments. Among 

other effects, such monitoring can help FSA assess whether the variation 

across state offices in the percentage of participants determined eligible 

for payments was related to the quality of state office reviews.

In addition, 2008 Farm Bill provisions establishing income limits can 

contribute to FSA state officials’ making erroneous determinations of 

participants’ eligibility to receive farm and conservation payments 

because the complexity of the provisions makes it difficult for the officials 

to verify if participants’ incomes exceed the limits. FSA state officials in 

several states told us they felt ill-prepared to review tax returns because 

they are not accountants or tax preparers, and the 2008 Farm Bill’s 

statutory limits further complicate the task. Specifically, because the 

eligibility limits for farm income and nonfarm income differ, the only way 

for FSA officials to verify that participants’ incomes do not exceed the 

limits is to comb through sometimes long and complex tax returns to 

classify and calculate farm and nonfarm income—a difficult task for 

agency officials whose expertise is in farm programs, not accounting or 

tax preparation. FSA’s handbook and training provide some basic 

guidance, but they cannot substitute for training as an accountant. 

Performing the task correctly requires not only a detailed understanding 

of the statutory income limits but also knowledge of various tax forms, 

business arrangements, and reporting options, and the difficulty of the 

task leaves FSA vulnerable to errors.

 

21GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 

(Washington, D.C.: November 1999).

FSA Headquarters Does 

Not Assess the Quality of 

State Offices’ Reviews, and 

Farm Bill Provisions Make 

Review of Tax Returns 

Difficult
 

Page 20 GAO-13-741 Farm Income Limits

The complexity of verifying that participants’ incomes do not exceed the 

limits is compounded by the 2008 Farm Bill’s definition of farm income, 

which is itself complex. Specifically, the 2008 Farm Bill directs the 

Secretary of Agriculture to determine average adjusted gross farm 

income on the basis of a detailed list of categories, which must be 

interpreted and applied by FSA state officials when reviewing tax returns. 

To identify farm income reported on tax returns, state officials cannot rely 

only on the IRS schedules and lines explicitly labeled as farm income 

because the Farm Bill’s definition is broader than IRS’s definition. For 

example, the 2008 Farm Bill defines income from the sale or rental of 

farmland as farm income, but IRS generally does not. Consequently, FSA 

officials must know where to find income from land sales or rentals on 

IRS forms and, for each sale or rental, ascertain whether the land in 

question was used for agricultural purposes. Furthermore, FSA officials 

must interpret the detailed definition to identify subtle distinctions. For 

example, if a participant leases farmland for an oil or gas pipeline right-ofway, lease income is to be counted as farm income, but if a participant 

receives income from extraction of oil or gas from beneath farmland, this 

income is not to be counted as farm income. And if a participant receives 

income through certain types of farming partnerships or corporations, it is 

to be considered farm income, but if the participant receives dividends as 

a shareholder in other types of farming corporations, the dividends are to 

be classified as nonfarm income.22 Also under the 2008 Farm Bill, the 

rental of farm equipment is to be counted as farm income in all cases, but 

the sale of farm equipment is to be considered farm income only if twothirds of a participant’s total income is farm income.

Recent bills in the House and Senate have proposed eliminating the 

distinction between farm income and nonfarm income, in favor of a limit 

on total adjusted gross income for farm and conservation program 

participants. Such income generally appears on a standard line or pair of 

lines on tax forms and could likely be verified through IRS’s automated 

computer programs, with no need for FSA to conduct additional reviews 

in most cases, thereby simplifying FSA’s task and offering greater 

assurance that farm payments would be made only to eligible 

participants. Without such simplification, FSA is likely to continue finding it 

difficult to accurately classify farm income and nonfarm income when 

 

22According to FSA officials, pass-through farm income that a participant receives from an 

S-corporation, partnership, or limited liability company is to be considered farm income.
 

Page 21 GAO-13-741 Farm Income Limits

reviewing tax returns. As a result, the agency may continue to make 

erroneous determinations of participants’ eligibility, leading to potentially 

improper payments.

When relying on accountants’ and attorneys’ statements to determine if 

participants’ incomes exceeded limits for 2009 and 2010, FSA state 

offices sometimes accepted statements that did not meet agency 

guidance, that contained errors, or both, resulting in some questionable 

eligibility determinations and potential payments to participants whose 

incomes exceeded statutory limits. FSA headquarters does not monitor its 

state offices’ reviews of accountants’ and attorneys’ statements to ensure 

that they apply agency guidance consistently or verify the statements 

against supporting documentation to ensure accuracy.

FSA’s handbook provides guidance for state officials when reviewing 

accountants’ and attorneys’ statements. State officials are to keep in each 

file a certain minimum set of documents related to eligibility 

determination. For files with accountants’ or attorneys’ statements, 

officials are to retain the statement and any attachments or enclosures. In 

addition, they are to retain many of the same documents as those 

required for tax return files, such as printouts showing the eligibility status 

recorded in FSA’s database and a calculation worksheet for average farm 

income and nonfarm income. Also, according to FSA’s handbook, state 

officials are to review the statements for certain key elements, including 

the following:23

• the accountant’s or attorney’s license number; 

• acknowledgment that the accountant or attorney has reviewed and is 

familiar with, among other items, farm income and nonfarm income 

limits;

• the amount of annual farm income and nonfarm income for each 

relevant year;

 

23According to FSA officials, they worked with the American Institute of Certified Public 

Accountants to develop the handbook’s instructions for accountants’ and attorneys’ 

statements. This organization represents the accounting profession and sets certain 

professional standards.

FSA’s Review of 

Accountants’ and 

Attorneys’ Statements 

Cannot Ensure That 

Participants Receiving 

Payments Comply 

with Income Limits

FSA State Offices 

Sometimes Accepted 

Accountants’ and 

Attorneys’ Statements That 

Did Not Meet Agency 

Guidance or Contained 

Errors 
 

Page 22 GAO-13-741 Farm Income Limits

• names of the IRS tax schedules and line numbers where farm income 

was reported on tax returns;

• average farm income and nonfarm income; and, if these averages 

appear to exceed the limits, a detailed explanation of the reason that 

the participant is eligible even so.

In our reviews of 163 files with accountants’ and attorneys’ statements 

from 18 selected state offices, we found many instances where FSA state 

officials kept in the files all the documents specified in agency guidance 

and accepted statements that included all key elements in the guidance. 

For example, in the Texas office, 14 of the 16 files we reviewed with 

accountants’ or attorneys’ statements included all the specified 

documents, and 14 of the 16 statements we reviewed included all the key 

elements. Further, several files from the California and Texas state offices 

included correspondence from the state office to accountants or 

attorneys, rejecting statements that did not include all elements specified 

in agency guidance and sometimes detailing what was needed, 

demonstrating these offices’ firm adherence to agency guidance. And 

FSA officials in two state offices went beyond what was required by 

agency guidance to verify that accountants’ and attorneys’ licenses were 

valid and current.

Our reviews, however, also found files in which FSA state officials 

accepted statements of participants’ incomes even though the statements 

did not contain all key elements specified in guidance. For example, of 

the accountants’ and attorneys’ statements we reviewed for California 

and Indiana, 6 of 15 and 15 of 24, respectively, were missing one or more 

key elements. Missing elements included income amounts and averages 

for all the relevant years, the names of the IRS schedules and line 

numbers where farm income was reported on tax returns, and a detailed 

explanation of why a participant’s income did not exceed limits when 

information on tax returns indicated otherwise.

Regarding the detailed explanation, accountants’ and attorneys’ 

statements we reviewed varied, particularly when allocating income 

reported on joint tax returns to individuals. Some statements simply 

reported the amount of farm income and nonfarm income that was to be 

attributed to an individual participant, and it was not clear from the 

statement whether the participant had filed a joint tax return. Other 

accountants and attorneys explained that they had allocated joint income 

as if the participant had filed a separate tax return, and still others 

provided a detailed table showing how they allocated every increment of 

income to each of the individuals listed on a joint return and whether they 
 

Page 23 GAO-13-741 Farm Income Limits

classified each increment as farm income or nonfarm income. According 

to FSA’s handbook, a detailed explanation is needed when the 

information on tax returns indicates that a participant’s income exceeds 

one or more of the limits for farm income and nonfarm income, but the 

handbook does not specify whether an explanation is always needed for 

participants who file joint tax returns or what is needed in such an 

explanation. According to our review, FSA state offices did not interpret or 

apply this guidance consistently, sometimes rejecting statements that 

lacked a sufficient explanation, as directed by the handbook, and 

sometimes accepting statements that had no explanation.

When accountants and attorneys included an explanation of methodology 

or other key elements in their statements, the elements sometimes 

revealed errors, such as using the wrong years’ income to calculate 

average incomes; counting some tax deductions twice; or using gross, 

rather than net, income to calculate totals—thereby reinforcing the 

importance of FSA’s ensuring that statements contain the elements listed 

in the agency’s guidance. Some FSA state officials recognized such 

errors and did not accept the statements, and other FSA state officials 

accepted statements with the errors. In one file we reviewed, an 

accountant included the names of IRS schedules and line numbers where 

farm income was reported, as called for in FSA’s handbook; the 

information showed that the accountant had misclassified certain tax 

deductions as farm income, which brought the participant’s nonfarm 

income below the limit. FSA’s state office accepted the statement with the 

classification error and mistakenly determined that the participant was 

eligible to receive farm payments totaling more than $90,000 in 2009 and 

2010. Further, we found a few files where FSA state officials introduced 

errors in calculations done as part of their reviews even though the 

accountants’ or attorneys’ statements had reported income correctly. For 

example, when calculating whether one participant’s income exceeded 

the limits, a state office used nonfarm income in place of total income and 

mistakenly found the participant to be eligible for 2010 farm payments.

Moreover, FSA officials could not always detect errors in accountants’ 

and attorneys’ statements because the files did not generally contain 

documentation—such as tax returns—that would have enabled officials to 

verify the accuracy of the income information in the statements. Although 

FSA’s handbook specifies that files of participants who submit 

accountants’ and attorneys’ statements are to contain a minimum set of 

documentation related to agency procedures and data tracking, these 

documents do not include income information.
 

Page 24 GAO-13-741 Farm Income Limits

Sometimes, however, accountants’ and attorneys’ statements included 

information beyond what is specified in the FSA handbook, and this 

additional information revealed errors that would not have been evident 

otherwise. Such additional information included the participant’s total 

income, as well as farm income and nonfarm income; detailed tables with 

income amounts, sources, and classifications; narrative justifications; or 

copies of tax returns. For example, we reviewed some statements in 

which total income amounts revealed calculation errors, or detailed tables 

revealed that accountants or attorneys had erroneously classified wages 

or other nonfarm income as farm income. In one file, a statement—which 

was prepared by a participant himself and explained that the participant 

was an accountant but not licensed at the time—contained detailed tables 

revealing that the participant had made errors, such as misclassifying 

wages as farm income; FSA state officials deemed him eligible to receive 

2009 and 2010 farm payments, which he would not have received had 

the office rejected his statement. In another statement, an accountant 

included information showing that a participant’s income from trading in 

commodity futures had been classified as farm income—even though the 

participant had reported this income on his tax returns as unrelated to 

farming—and this classification brought the participant’s nonfarm income 

below the limit.24 Relying on the accountant’s statement, the FSA state 

office determined the participant to be eligible to receive over $30,000 in 

farm payments. In addition, when accountants’ or attorneys’ statements 

provided narrative justifications, they sometimes reasoned that certain 

adjustments should be made that would bring participants’ incomes below 

the limit. For example, one accountant said that FSA should use the 

income of the participant’s deceased mother when verifying eligibility, and 

another subtracted income that a participant received from an individual 

retirement account. With such additional explanation, FSA state officials 

were able to identify the errors, and they did not accept the statements.

 

24In this case, the relevant provisions of the IRS tax code and FSA guidance are subject 

to interpretation, so the accountant’s classification of this participant’s income, as well as

FSA’s eligibility determination, may have been proper. According to IRS’s Farmer’s Tax 

Guide, a farmer is to count income from trading in commodity futures as farm income if the 

following three conditions are met: (1) the farmer enters the transactions to protect himself 

from the risk of unfavorable price fluctuations, (2) the commodity is the same one the 

farmer produces, and (3) the amount traded is within the farmer’s range of production. 

According to the Farmer’s Tax Guide, such income is to be reported as farm income on 

tax returns. In general, when income is generated through trading in commodity futures 

unrelated to a farmer’s own commodity production, the Farmer’s Tax Guide calls for such 

income to be reported as capital gains, which are taxed at a lower rate.
 

Page 25 GAO-13-741 Farm Income Limits

In interviews, state officials described taking different approaches to 

reviewing files with accountants’ and attorneys’ statements. For example, 

officials in the Kansas state office said they routinely verified that 

accountants’ and attorneys’ license numbers were valid and current, even 

though such verification was not mentioned in FSA guidance, because 

they believed it was an important step in holding the accountants and 

attorneys accountable; officials in several other state offices, in contrast, 

said they did not do such verification. Also, officials in two state offices 

said they confirmed that statements included the names of the IRS tax 

schedules and line numbers where farm income was reported on tax 

returns but did not further investigate whether it was permissible to report 

farm income on these lines. When accountants or attorneys enclosed 

copies of tax returns with their statements, officials in one state office said 

they reviewed the tax returns, as well as the statements, to verify the 

accuracy of the statements. In three state offices, in contrast, officials said 

they reviewed the tax returns only if the statements did not provide 

enough information to make a determination about a participant’s 

eligibility. Officials in several state offices said they did not feel 

comfortable challenging anything in an accountant’s or attorney’s 

statement because they did not have expertise in accounting or tax 

preparation and, without additional documentation, had limited support for 

such a challenge.

FSA’s headquarters does not monitor the quality of state offices’ reviews

of accountants’ and attorneys’ statements to help ensure that the offices 

accept only statements that include all the key elements specified in the 

FSA handbook and are error-free or that the offices retain all required 

documents in the files, even though, as cited earlier, monitoring is an 

important federal standard of internal control. Without such monitoring, 

FSA cannot be assured that eligibility determinations based on state 

office reviews of accountants’ and attorneys’ statements are accurate.

To help state officials identify errors in accountants’ and attorneys’ 

statements and increase accountability, FSA has made some 

improvements beginning with reviews for 2011. Specifically, FSA added 

more detail to its handbook about information that statements are to 

contain. For example, in addition to the key elements the handbook 

previously called for, beginning with reviews for 2011, statements were to 

include the total adjusted gross income used to calculate nonfarm income 

and documents or a spreadsheet showing how and why joint income was 

allocated to the relevant individuals. When total adjusted gross income 

information is available, FSA state officials can identify statements where 

FSA Does Not Monitor Its 

State Offices’ Reviews or 

Verify Accountants’ and 

Attorneys’ Statements
 

Page 26 GAO-13-741 Farm Income Limits

accountants or attorneys made an error calculating nonfarm income—for 

example, when an individual’s farm income was recorded as less than 

zero—a mistake one state office reported seeing numerous times. And 

with a spreadsheet showing how and why joint income was allocated to 

the relevant individuals, state officials can identify statements where 

accountants or attorneys made an error in classifying or calculating 

income amounts. In addition, FSA has developed an automated 

calculation worksheet to help reduce income calculation errors made 

during state office reviews. All state offices were to use the new 

worksheet beginning with reviews for 2011.

Even with these improvements, FSA cannot detect all errors in 

accountants’ and attorneys’ statements without reviewing supporting 

documents. For eligibility requirements other than those based on income 

(e.g., a requirement that recipients of certain farm payments be “actively 

engaged in farming”25), FSA reviews a sample of program participants’ 

documentation. The agency does not, however perform such reviews to 

check accountants’ and attorneys’ statements against documentation 

supporting participants’ eligibility on the basis of income. Consequently, 

FSA cannot be assured of the statements’ accuracy or that payments are 

being made only to participants whose incomes fall below statutory limits. 

Since 2012, FSA has been recovering millions of dollars in payments 

made to participants determined to have exceeded income limits, but 

NRCS has not started to do so because, according to NRCS officials, the 

agency first needed to update its project management software. NRCS 

expects to send letters seeking reimbursement of overpayments by 

September 2013.

 

25To be eligible for payments and benefits under certain farm programs, all program 

participants, either individuals or legal entities, must provide significant contributions to the 

farming operation to be considered actively engaged in farming. Contributions can consist 

of capital, land, equipment, or all three, as well as active personal labor, active personal 

management, or both. Each year, FSA requests documentation from a sample of 

participants to verify that they meet this “actively engaged” requirement. For example, to 

verify labor contributions, FSA may request employee time sheets or books or canceled 

checks paid to hired labor.

FSA Is Recovering 

Overpayments, but 

the Natural Resources 

Conservation Service 

Has Not Begun 

to Do So
 

Page 27 GAO-13-741 Farm Income Limits

According to FSA data, FSA in May 2012 started to recover about 

$142.7 million in payments made to participants who exceeded income 

limits for 2009 and 2010, as well as payments to participants who 

provided no consent forms for 2009 and 2010. As of June 2013, FSA had 

recovered about $122.2 million in overpayments and sent letters to 

participants requesting repayment of about $20.5 million.

To recover overpayments made under most FSA programs, agency 

officials enter ineligibility determinations into the agency’s eligibility 

database; the amount paid to each participant exceeding income limits is 

then calculated automatically, and letters seeking repayment are sent to 

these participants. Specifically, FSA uses an integrated payment process, 

which reads data from many systems to determine whether payments 

issued to a participant were earned in full or in part. Among other data, 

these systems hold information on participants’ applications for various 

farm programs, their eligibility status, and their membership in entities 

such as corporations or partnerships. When a participant’s status 

changes from eligible to ineligible (e.g., because his or her income 

exceeds limits), the payment process is automatically triggered to 

recalculate the participant’s payment, and if the new payment amount is 

less than the amount originally paid, an overpayment is identified. After a 

holding period of about 10 days to provide FSA county offices the 

opportunity to make corrections if errors are found, the overpayment is 

automatically transferred to USDA’s National Receipts and Receivables 

System (Receivables System).26 Once overpayments are in the 

Receivables System, this system automatically generates debt letters to 

participants, and FSA officials print and send them from a central 

location.27

For entities with multiple members, each member must meet income 

limits. By law, when one or more members has an income exceeding the 

limits, the entity’s payment must be reduced in proportion to the ineligible 

member’s ownership share. For such cases, letters are automatically 

 

26FSA has about 2,100 county offices, which are responsible for recording participant 

information in the agency’s eligibility database and for taking certain steps related to 

collecting overpayments, among other responsibilities.

27For payments under programs such as certain small conservation and loan programs, 

FSA county officials manually calculate and enter into the Receivables System the 

amounts to be recovered from participants whose incomes exceed the limits, and letters 

are automatically generated.

FSA Expects to Recover 

$143 Million in Payments 

Made to Participants Who 

Exceeded Income Limits 

for 2009 and 2010
 

Page 28 GAO-13-741 Farm Income Limits

generated and sent to the entity, which must refund the amount 

attributable to the ineligible member or members.

FSA completed some, but not all, of its income verification reviews for 

2009 and 2010 before 2012 farm payments were issued to participants in 

October 2012. Where possible, the agency used any 2012 farm payments 

to which a participant was entitled to offset the amount the participant 

owed. This approach prevented some, but not all, instances in which FSA 

sent a 2012 payment to a participant in October and then, in the following 

weeks or months, sent a letter seeking recovery of 2009 or 2010 

payments. According to an FSA headquarters official, the agency is 

limited in its ability to offset payments in this way because it does not 

receive data from IRS soon enough. FSA and IRS officials told us that 

they are considering ways for IRS to share data with FSA more often, 

such as daily. In addition, the timing of some state offices’ reviews 

precluded using offsets for 2012. FSA began implementing the income 

verification process for 2009 and 2010 in April 2012, when it sent letters 

to participants notifying them that, according to information reported on 

tax returns, their incomes may have exceeded limits. Some state offices 

completed their verification reviews by September or October 2012, but 

other state offices’ reviews took longer, with some reviews still incomplete 

in January or February 2013. Agency officials in several state offices said 

it was difficult to complete the reviews more quickly because reviewing 

tax returns and accountants’ or attorneys’ statements is time-consuming 

and requires significant resources.

In contrast to FSA, NRCS has not begun to recover payments made to 

participants whose incomes exceeded the limits, although agency officials 

told us that the agency plans to do so soon. Officials said they first had to 

update the agency’s project management software to read data from 

FSA’s eligibility database and automate the payment recovery process, 

with the goal of making the process accurate, efficient, and properly 

documented. NRCS headquarters officials said they are in the process of 

determining the dollar amount of overpayments to be recovered from 

participants whose incomes exceeded limits for 2009 and 2010 and that 

the agency expects to know the amount by September 2013.

NRCS Has Not Begun to

Recover Overpayments 

Made to Participants 

Whose Incomes Exceeded 

Limits 
 

Page 29 GAO-13-741 Farm Income Limits

Unlike FSA’s farm payments, which participants must generally apply for 

each year,28 NRCS’s conservation payments are generally made under 

multiyear contracts. According to FSA’s handbook, participants’ 

compliance with statutory income limits is determined for the year the 

contract is approved, and once their eligibility is established, participants 

remain eligible for the term of the contract. Consequently, before 

collecting overpayments, NRCS must identify any contracts approved in 

2009 and 2010 with participants whose incomes exceeded the limit in the 

year the contract was approved. For all of these contracts—including 

active, completed, and canceled ones—NRCS must collect all 

overpayments made in the past and, for the contracts that are still active, 

prevent payment of any additional amounts. In addition, for contracts that 

NRCS has with entities, all entity members must meet income limits for 

the year the contract is approved to be entitled to a payment. 

Consequently, for contracts approved in 2009 and 2010, NRCS must also 

identify entities found to have one or more ineligible members for those 

years and reduce the entity’s payment in proportion to the member’s 

share in the entity.

According to NRCS officials, they completed the software update in 

February 2013 and issued guidance on payment recovery procedures in 

April 2013. In addition, NRCS held a training session about the new 

procedures for its state offices, which are responsible for identifying and 

recovering overpayments made to participants whom FSA determined to 

have incomes exceeding the conservation limit in 2009 or 2010. The 

update will allow NRCS’s database to coordinate with FSA’s eligibility 

database and automatically prevent future payments to participants who 

have been recorded as exceeding the income limit in FSA’s database. 

The guidance provides procedures for identifying and collecting 

overpayments that have already been made. According to this guidance, 

NRCS’s state offices must first update the eligibility status associated with 

each 2009 and 2010 contract in the agency’s contract management 

database. Next, according to the guidance, state officials are to determine 

the amounts to be collected for overpayments, send participants 

collection letters, and enter the receivable amount into the agency’s 

 

28For the Conservation Reserve Program, which has multiyear contracts and is one of the 

conservation programs FSA administers, FSA is responsible for recovering payments from 

participants with incomes exceeding $1 million who had contracts approved under this 

program in 2009 or 2010.
 

Page 30 GAO-13-741 Farm Income Limits

financial management database. The guidance calls for all these steps to 

be completed by September 2013.

As nationwide fiscal pressures continue, and farm incomes remain high, it 

is crucial to ensure that limited taxpayer dollars are spent to support only 

eligible farm and conservation program participants. FSA has taken 

significant steps to ensure that program payments go only to participants 

whose incomes do not exceed statutory limits. Partly in response to 

recommendations we made in 2008, the agency implemented 

management controls whereby (1) it worked with the IRS to identify 

participants whose incomes potentially exceeded limits laid out in the 

2008 Farm Bill and (2) took steps to verify that participants receiving 

payments had incomes below the limits. FSA now has a process 

specified in guidance for verifying that participants do not have incomes 

exceeding limits and, in 2012, started to collect about $143 million in 

overpayments identified through the new process. Nevertheless, with 

these provisions of the 2008 Farm Bill still in effect, it remains difficult to 

accurately classify farm income and nonfarm income when reviewing tax 

returns. Without simplification of these provisions, this difficulty—and the 

resulting errors—are likely to persist, along with payments to some 

ineligible participants. Moreover, FSA state offices have not always 

followed guidance, and their reviews of tax returns and accountants’ or 

attorneys’ statements vary in quality, sometimes resulting in erroneous 

determinations of participants’ eligibility to receive payments. FSA 

headquarters has not monitored state offices’ reviews to assess their 

quality, even though monitoring is a federal standard for internal control 

that can help ensure state offices’ consistent adherence to guidance, hold 

state offices accountable for accurate determinations of participants’ 

eligibility to receive payments, and help prevent payments to participants 

who exceed income limits. Furthermore, accountants’ and attorneys’ 

statements sometimes contained errors, which FSA did not consistently 

identify in the statements we reviewed, in part because the agency did 

not verify the accuracy of participants’ income information for a sample of 

those statements, as it does for eligibility requirements other than income. 

Consequently, without monitoring of reviews and verification of 

statements, errors in FSA’s reviews of tax returns and statements are 

likely to persist, and payments to some ineligible participants are also 

likely to continue.

Conclusions 
 

Page 31 GAO-13-741 Farm Income Limits

To reduce the risk of USDA’s making potentially improper payments to 

participants whose incomes exceed statutory limits for farm and 

conservation programs, Congress should consider simplifying those 

limits. Such simplification could involve eliminating the distinction between 

farm income and nonfarm income as reported on tax returns and using 

total adjusted gross income to set income limits for participants’ payment 

eligibility.

To further improve agency controls that help prevent payments to 

participants whose incomes exceed eligibility limits, we recommend that 

the Secretary of Agriculture direct the Administrator of FSA to take the 

following two actions:

• Institute monitoring to assess the quality of state offices’ reviews of 

tax returns and of accountants’ and attorneys’ statements to ensure 

stricter adherence to the agency’s guidance for verifying compliance 

with income limits.

• Implement a process to verify that accountants’ and attorneys’ 

statements accurately reflect participants’ incomes as reported on 

income tax returns and supporting documentation or other equivalent 

documents.

We provided the Secretary of Agriculture with a draft of this report for 

review and comment. In written comments, which are summarized below 

and reproduced in appendix VI, the Administrator of FSA said that USDA 

generally agreed with our report’s findings and recommendations. The 

comment letter further states that agency officials have had discussions 

under way for development of a methodology to verify the accuracy of 

information in accountants’ and attorneys’ statements. USDA also 

commented that our report does not describe the significant resources—

including employees at all levels within FSA—dedicated to the income 

verification process or the challenges that IRS and FSA worked to 

overcome to jointly launch this process in 2009. In addition, the letter 

states that the draft report did not mention the costs to USDA of having 

IRS use its data, make calculations, and transfer electronic data to FSA. 

We agree that FSA has devoted significant resources to implementing the 

verification process—and added information about the costs to USDA of 

IRS’ services—but a detailed review of these resources was beyond the 

scope of this report.

Matter for 

Congressional 

Consideration 

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
 

Page 32 GAO-13-741 Farm Income Limits

In addition, USDA stated that our report identifies FSA as responsible for 

administering the bulk of farm program payments and NRCS as 

responsible for administering payments for most conservation programs. 

USDA’s letter said, “while this is a true statement, it may mislead the 

reader to think most of the conservation payments are administered by 

NRCS, which may not be the case.” The comment letter acknowledges 

that in footnotes the report shows that FSA also administers conservation 

programs but states that the report “does not distinguish between the 

administering of programs and payments.” When we followed up with 

NRCS, however, it could not provide data to corroborate this statement or 

to clarify the number of conservation payments it administers.

USDA stated that it did not agree with the statement in the draft report 

that NRCS has not begun to recover payments, stating that NRCS 

officials discussed with us during our review the importance that 

collections be addressed nationally with a software change to ensure 

accuracy and consistency. The comment letter states that the payment 

recovery process began with NRCS issuance of guidance in April 2013. 

Nevertheless, agency officials said that as of August 2013, NRCS had not 

yet collected overpayments. Because the agency has not yet collected 

payments, we continue to believe that our report statement is accurate.

USDA also provided technical comments, which we incorporated as 

appropriate.

We are sending copies of this report to the Secretary of Agriculture, the 

appropriate congressional committees, and other interested parties. In 

addition, the report is available at no charge on the GAO website at 

http://www.gao.gov. 

If you or your staff members have any questions about this report, please 

contact me at (202) 512-3841 or garciadiazd@gao.gov. Contact points for 
 

Page 33 GAO-13-741 Farm Income Limits

our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this report. Key contributors to this report are listed in 

appendix VII. 

Sincerely yours,

Daniel Garcia-Diaz

Director, Natural Resources and Environment
Appendix I: Objectives, Scope, and 

Methodology

Page 34 GAO-13-741 Farm Income Limits

Our objectives were to examine (1) the Farm Service Agency’s (FSA) 

review of participants’ tax returns to verify that participants receiving 

payments do not exceed income limits, (2) FSA’s review of accountants’ 

and attorneys’ statements to verify participants’ incomes, and (3) FSA’s 

and the Natural Resources Conservation Service’s (NRCS) recovery of 

overpayments to participants determined to have exceeded income limits.

To examine FSA’s review of participants’ tax returns and accountants’ 

and attorneys’ statements to verify participants’ incomes for 2009 and 

2010 (the most recent years for which data were available), we reviewed 

portions of the 2008 Farm Bill related to income limits to understand the 

statutory requirements, and FSA’s handbook on payment eligibility and 

other relevant agency guidance to understand how the agency 

implemented the limits. In addition, we reviewed 278 files from a 

nonprobability sample of 18 FSA state offices chosen from among FSA’s 

51 state offices. We chose these 18 offices to reflect diversity with respect 

to number of income eligibility reviews the offices conducted, size and 

type of farm and conservation programs, and geographic location. We 

initially selected 19 state offices: 3 of the 4 state offices that had reviewed 

750 or more files for income eligibility, 6 of the 35 state offices that had 

reviewed fewer than 750 files but at least 30, and all 10 of the state 

offices that had reviewed fewer than 30 files. We later removed 3 of these 

state offices (Colorado, Georgia, and Minnesota) from our sample when 

we learned that they had not completed their reviews and, using the same 

selection criteria above, added 2 others (Indiana and Ohio) that had 

completed their reviews. The 18 states in our final sample were Arkansas, 

California, Connecticut, Hawaii, Indiana, Kansas, Louisiana, Maine, 

Massachusetts, Missouri, Nevada, New Hampshire, New Jersey, Ohio, 

Rhode Island, Texas, Vermont, and West Virginia.

Under FSA’s income verification process, FSA state offices created and 

reviewed a file for each farm and conservation program participant 

identified by the Internal Revenue Service (IRS) as potentially exceeding 

income limits. Because the number of participants identified by IRS varied 

from state to state, so too did the number of files FSA state offices 

reviewed, ranging from 0 to nearly 2,000. Using logical break points, we 

divided the state offices into three groups according to how many files 

they had reviewed: (1) states with 750 or more files, (2) states with 30 to 

749 files, and (3) states with fewer than 30 files. For state offices we 

selected that had reviewed 750 or more files, we drew a random sample 

of 30 files for our examination, and for state offices with 30 to 749 files, 

we generally drew a random sample of 24 files. Within each sample, we 

used state offices’ preliminary data to (1) select half with tax returns and 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 35 GAO-13-741 Farm Income Limits

the other half with accountants’ and attorneys’ statements and (2) include 

determinations of both eligibility and ineligibility for participation in farm 

and conservation programs. Once we had sorted state offices’ preliminary 

data into categories on the basis of document type (tax returns or 

accountants’ and attorneys’ statements) and eligibility determination, we 

used computer software to randomly select files from each category.1

Because we used preliminary data to select our sample, determinations 

of participants’ eligibility sometimes changed, and files originally 

categorized as tax return files or accountants’ or attorneys’ statement files 

sometimes turned out to include both types of documents. For files with 

both types of documents, we categorized them according to the 

document used as the basis for FSA’s determination of eligibility. For the 

10 states with fewer than 30 reviews, we obtained and examined all their 

files. In total, we reviewed 278 files—115 tax return files and 163 files with 

accountants’ or attorneys’ statements. All 18 state offices in our sample 

had at least 1 file with accountants’ or attorneys’ statements, and 13 of 

the state offices had at least 1 tax return file.2 We reviewed the files to 

evaluate FSA state offices’ compliance with agency guidance and to 

understand the offices’ rationale for their eligibility determinations. 

Because neither the state offices nor the files we ultimately reviewed 

were entirely chosen at random, our results cannot be generalized to all 

files in a given state office (except for the states in which we reviewed all 

files) or to all files nationwide. Nevertheless, by providing examples, the 

information from these files enhanced our understanding of FSA’s income 

verification process. To understand the agency’s policies, procedures, 

and practices for verifying participants’ income eligibility, and to discuss 

files we reviewed, we also visited and interviewed FSA headquarters 

officials and officials in 8 state offices. We selected these state offices to 

include offices that had at least 250 files to review and to reflect diversity 

with respect to size and type of farm and conservation program and 

geographic location. These 8 offices were located in Indiana, Iowa, 

Kansas, Louisiana, Nebraska, Ohio, Missouri, and Texas.

 

1

For one state office, we drew the random sample by hand, selecting files at specific

intervals from a list of all files in each category, because we had not yet developed the 

approach using computer software.

2

The 13 state offices that had at least one tax return file were in Arkansas, California, 

Connecticut, Indiana, Kansas, Louisiana, Missouri, Nevada, New Jersey, Ohio, Texas, 

Vermont, and West Virginia.
Appendix I: Objectives, Scope, and 

Methodology

Page 36 GAO-13-741 Farm Income Limits

In addition to reviewing FSA files from selected state offices, we collected 

nationwide FSA data on the agency’s process for determining eligibility on 

the basis of income. To assess the reliability of FSA’s data, we 

(1) performed electronic testing of required data elements, including 

examining the data for missing and inconsistent values; (2) reviewed 

existing information about the data and the system that produced them; 

and (3) interviewed agency officials knowledgeable about the data. We 

found these data to be sufficiently reliable for the purposes of this report. 

We analyzed FSA’s data to identify any differences across states in 

eligibility determination rates for 2010. Specifically, we counted all cases

in which FSA made determinations that participants were either eligible or 

ineligible for farm payments (including when participants acknowledged 

having incomes that exceeded limits or did not respond to FSA’s 

notification letters). We excluded from this analysis cases in which FSA 

(1) did not make a determination of eligibility because, for example, the 

participant did not receive farm payments; (2) removed the participant 

from review because, for example, he or she was deceased; or 

(3) determined participants to be ineligible because they did not provide 

consent forms. We also used the data to report the number of participants 

identified by IRS as potentially ineligible; the number without consent 

forms; the number deemed ineligible by FSA; and the dollar amount that 

FSA expects to collect from participants found to be ineligible for 2009, 

2010, and 2011 payments.

To examine FSA’s recovery of overpayments to participants whose 

incomes were determined to have exceeded statutory limits in 2009 and 

2010, as well as participants with no consent forms for 2009, 2010, and 

2011, we collected nationwide FSA data on payment amounts to be 

recovered; reviewed agency guidance on payment recovery; and 

interviewed agency officials about policies, procedures, and practices 

used to recover such payments. To assess the reliability of these data, 

we reviewed existing information about the data and the system that 

produced them and interviewed agency officials knowledgeable about the 

data. We determined that the data were reliable for purposes of this 

report. To examine NRCS’s payment recovery process, we read 

government reports on the topic, including reports by the U.S. 

Department of Agriculture (USDA) Office of Inspector General; reviewed 
Appendix I: Objectives, Scope, and 

Methodology

Page 37 GAO-13-741 Farm Income Limits

agency guidance; and interviewed NRCS officials in its headquarters and 

in three state offices (Iowa, Louisiana, and Missouri).3

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.

 

3

We selected these three NRCS state offices because of their proximity to FSA state 

offices we visited.
Appendix II: Farm and Conservation Program 

Income Limits in the 2008 Farm Bill

Page 38 GAO-13-741 Farm Income Limits

Farm and conservation program participants—individuals, entities, and 

members of entities—must have incomes below limits established in the 

2008 Farm Bill to be eligible to receive payments under certain programs. 

The 2008 Farm Bill established separate limits for farm income and 

nonfarm income; both limits are based on adjusted gross income (or a 

comparable measure) as reported on tax returns and averaged over the 

3 most recent years. In addition, the Consolidated and Further Continuing 

Appropriations Act, 2012, established another income limit applicable only 

to 2012 recipients of payments known as direct payments.1 Table 1

shows the programs and the applicable income limit or limits for each, as 

established in the 2008 Farm Bill and the 2012 act.

Table 1: Income Limits for Farm and Conservation Programs

Program or payment category

Income limit

(average adjusted gross income over 3 most recent tax years)

Nonfarm income Farm income Total income

Farm commodity programs

Direct and Countercyclical Program countercyclical payments

Average Crop Revenue Election

Loan Deficiency Payment

Marketing Assistance Loan

Milk Income Loss Contract

$500,000 N/A N/A

Direct and Countercyclical Program direct payments, 2009-2012 $500,000 $750,000 N/A

Direct and Countercyclical Program direct payments, 2012 $500,000 $750,000 $1,000,000

Farm disaster programs

Supplemental Revenue Assistance

Noninsured Crop Disaster Assistance

Livestock Forage Disaster

Livestock Indemnity

Emergency Assistance Program for Livestock, Honey Bees and 

Farm-Raised Fish

Tree Assistance

$500,000 N/A N/A

 

1

Direct payments are fixed annual payments based on farms’ historical production of 

particular commodity crops.

Appendix II: Farm and Conservation Program 

Income Limits in the 2008 Farm Bill
Appendix II: Farm and Conservation Program 

Income Limits in the 2008 Farm Bill

Page 39 GAO-13-741 Farm Income Limits

Program or payment category

Income limit

(average adjusted gross income over 3 most recent tax years)

Nonfarm income Farm income Total income

Conservation programs

Agricultural Management Assistance

Agricultural Water Enhancement

Chesapeake Bay Watershed

Conservation Reserve

Conservation Stewardship

Cooperative Conservation Partnership Initiative

Environmental Quality Incentives

Farm and Ranchland Protection

Grasslands Reserve

Wetlands Reserve

Wildlife Habitat Incentive

$1,000,000a N/A N/A

Source: GAO analysis of USDA information and legislative provisions.

Legend: N/A = not applicable

Notes: The income limits apply to individuals, legal entities, and members of entities. A husband and 

wife may divide their income as if they had filed separate income tax returns.

a

This limit does not apply if at least 66.66 percent of adjusted gross income—that is, the sum of 

adjusted gross nonfarm income plus adjusted gross farm income—was adjusted gross farm income. 

FSA or NRCS may waive this limit on a case-by-case basis to protect environmentally sensitive land 

of special significance.

The 2008 Farm Bill also outlined the definitions of nonfarm income and 

farm income. Nonfarm income is the difference between average 

adjusted gross income and average adjusted gross farm income. Farm 

income, as defined in USDA regulations implementing the 2008 Farm Bill, 

is the portion of average adjusted gross income derived from, or related 

to, the following list of activities:

• production of crops, specialty crops, and unfinished raw forestry 

products;

• production of livestock, including but not limited to, cattle, elk, 

reindeer, bison, horses, deer, sheep, goats, swine, poultry, fish and 

other aquaculture products used for food; honeybees; and products 

produced by, or derived from, livestock;

• production of farm-based renewable energy;

• sale, including the sale of easements and development rights, of farm, 

ranch, forestry land; water or hunting rights; or environmental benefits;

• rental or lease of land or equipment, used for farming, ranching, or 

forestry operations, including water or hunting rights;

• processing, packing, storing, shedding, and transporting of farm, 

ranch, and forestry commodities, including renewable energy;
Appendix II: Farm and Conservation Program 

Income Limits in the 2008 Farm Bill

Page 40 GAO-13-741 Farm Income Limits

• feeding, rearing, or finishing of livestock;

• sale of land that has been used for agriculture;

• any payment or benefit, including benefits from risk management 

practices, crop insurance indemnities, and catastrophic risk protection 

plans;

• payments and benefits authorized under any program made 

applicable to income eligibility requirements;

• any other activity related to farming, ranching, or forestry, as 

determined by FSA;

• any income reported on specified IRS schedules used by the person 

or legal entity to report income from farming, ranching, or forestry 

operations to the IRS; and

• sale of equipment to conduct farm, ranch, or forestry operations and 

the provision of production inputs and services to farmers, ranchers, 

foresters, and farm operations, if the average adjusted gross farm 

income is at least 66.66 percent of average adjusted gross income.
Appendix III: Information on NRCS and FSA 

Waivers of Statutory Income Limit for 

Conservation Payments, 2009 and 2010

Page 41 GAO-13-741 Farm Income Limits

The 2008 Farm Bill allows NRCS or FSA to waive the $1 million nonfarm 

income limit for conservation payments in cases involving environmentally 

sensitive land of special significance. According to NRCS documents, the 

agency waived the income limit 4 times in 2009 and 15 times in 2010, to 

approve multiyear conservation contracts with payments of about 

$89 million in total over multiple years. FSA did not issue any waivers in 

2009 and waived the limit 11 times in 2010 to approve multiyear contracts 

with conservation payments of about $80,000 in 2010 and additional 

payments in subsequent years, according to agency officials. Table 2 

shows the number of income limit waivers approved under specified 

NRCS and FSA programs, and the payment associated with each waiver, 

for 2009 and 2010.

Table 2: Natural Resources Conservation Service and Farm Service Agency Waivers of Statutory Income Limit and Their 

Associated Conservation Payments, 2009 and 2010

2009 2010

Number of

waivers in yeara Benefitvalue (dollars)

Number of 

waivers in yeara Benefit value (dollars)

NRCS program

Wetland Reserve Program 2 $10, 000,000 8 $5,800,000

234,520 21,947,815

7,924,250

900,853

80,000

31,755,730

5,405,393

227,203

Grassland Reserve Program 1 2,797,200

Environmental Quality Incentive Program 4 299,846

48,768

210,000

35,250

Farmland Protection Program 1 $630,000 0 

Wildlife Habitat Incentive Program 1 $193,241 2 99,993

449,622

Total for NRCS 4 11,057,761 15 77,981,923

Appendix III: Information on NRCS and FSA 

Waivers of Statutory Income Limit for 

Conservation Payments, 2009 and 2010
Appendix III: Information on NRCS and FSA 

Waivers of Statutory Income Limit for 

Conservation Payments, 2009 and 2010

Page 42 GAO-13-741 Farm Income Limits

2009 2010

Number of

waivers in yeara Benefitvalue (dollars)

Number of 

waivers in yeara Benefit value (dollars)

FSA program

Conservation Reserve Program 0 0 11 993b

993

420

1,945

6,398

5,289

3,277

9,014

12,767

35,340

3,448

Total for FSA 0 0 11 79,884

Sources: GAO, Farm Service Agency, and Natural Resources Conservation Service.

Notes: Each waiver in this table was granted in the stated year and waived the $1 million nonfarm 

income limit for a given participant associated with a conservation program contract. For NRCS, each 

dollar amount represents the total value of a multiyear contract, which may be paid over many years. 

For FSA, in contrast, each dollar amount represents only payments made in 2010.

a

Numbers in this column represent only those waivers associated with contracts and program 

payments. In 2009, FSA approved three waivers but did not enter into any related contracts, and in 

2010, the agency approved one waiver without entering into a related contract.

b

For FSA’s Conservation Reserve Program, dollar amounts represent only the portion of each 

contract for which a payment was made in 2010. According to an FSA official, total values of 

multiyear contracts were not readily available.
Appendix IV: Number of Farm and 

Conservation Program Participants Ineligible 

Because of Income Limits, 2009 and 2010

Page 43 GAO-13-741 Farm Income Limits

In 2009, FSA implemented a new process for verifying whether farm and 

conservation program participants’ incomes exceeded statutory limits and 

determined that less than 1 percent of participants receiving payments 

under these programs were in fact ineligible for the payments. Under the 

new process, participants provided consent forms allowing IRS to 

disclose certain tax-related information to FSA. For participants who 

provided the consent forms, IRS identified and shared with FSA a list of 

participants for whom tax data showed that their incomes may have 

exceeded statutory limits in 2009, 2010, or both years. FSA also identified 

additional participants who had no consent forms in those years. 

According to FSA’s handbook, participants who do not provide consent 

forms are ineligible to receive farm and conservation payments through 

programs subject to income limits. FSA gave all participants identified by 

IRS or FSA an opportunity to provide additional information and used any 

information provided to determine eligibility. For participants determined 

to be ineligible for 2009 and 2010 FSA program payments, the agency 

identified overpayment amounts and sent letters seeking repayment. For 

2009 and 2010, tables 3 and 4, respectively, show, by state, the number 

of program participants and the number of participants IRS identified as 

potentially exceeding income limits.

Table 3: Farm and Conservation Program Participants Found to Be Ineligible in 2009, by State

State 

Number of 

participants subject to 

income limits

Number of participants 

identified by IRS as 

potentially exceeding 

income limits

Number of participants 

without consent forms

Number of participants 

ineligible because of 

income limits

Alabama 19,631 596 2,298 441

Alaska 60 19 1 

American Samoa 4 

Arizona 2,203 309 1,129 102

Arkansas 26,290 767 2,311 459

California 13,396 1,264 4,585 307

Colorado 19,359 519 2,474 159

Connecticut 330 15 163 52

Delaware 1,221 55 218 21

Florida 4,722 343 1,490 220

Georgia 26,551 689 2,906 197

Guam . 6 1 

Hawaii 194 24 175 28

Idaho 12,972 416 1,157 161

Appendix IV: Number of Farm and 

Conservation Program Participants Ineligible 

Because of Income Limits, 2009 and 2010
Appendix IV: Number of Farm and 

Conservation Program Participants Ineligible 

Because of Income Limits, 2009 and 2010

Page 44 GAO-13-741 Farm Income Limits

State 

Number of 

participants subject to 

income limits

Number of participants 

identified by IRS as 

potentially exceeding 

income limits

Number of participants 

without consent forms

Number of participants 

ineligible because of 

income limits

Illinois 126,878 1,997 7,160 1,080

Indiana 64,822 844 4,017 512

Iowa 118,593 1,315 6,176 692

Kansas 102,365 1,677 6,104 1,068

Kentucky 63,403 679 1,469 708

Louisiana 24,250 623 2,553 1,071

Maine 1,462 12 1,336 241

Maryland 6,003 229 399 94

Massachusetts 547 25 250 18

Michigan 28,806 191 2,148 231

Minnesota 75,969 569 3,949 382

Mississippi 25,428 672 3,347 229

Missouri 69,063 1,097 4,800 826

Montana 20,241 407 2,209 145

Nebraska 67,727 918 1,676 338

Nevada 337 28 154 17

New Hampshire 279 20 343 75

New Jersey 910 46 93 19

New Mexico 5,033 165 1,682 471

New York 11,488 95 1,481 120

North Carolina 30,746 413 1,918 173

North Dakota 42,312 351 1,945 151

Northern Mariana 5 1 

Ohio 57,425 501 3,162 208

Oklahoma 40,425 803 4,974 1,248

Oregon 7,202 278 1,336 81

Pennsylvania 17,626 108 1,466 63

Puerto Rico 635 938

Rhode Island 49 10 171

South Carolina 12,062 286 1,104 297

South Dakota 39,173 597 2,200 297

Tennessee 36,546 543 2,428 394

Texas 93,466 3,021 8,796 2,353

Utah 3,260 76 678 131

Vermont 1,746 26 683 65
Appendix IV: Number of Farm and 

Conservation Program Participants Ineligible 

Because of Income Limits, 2009 and 2010

Page 45 GAO-13-741 Farm Income Limits

State 

Number of 

participants subject to 

income limits

Number of participants 

identified by IRS as 

potentially exceeding 

income limits

Number of participants 

without consent forms

Number of participants 

ineligible because of 

income limits

Virgin Islands 17 . 

Virginia 15,681 317 404 107

Washington 14,130 337 2,442 160

West Virginia 2,300 36 220 30

Wisconsin 51,661 314 4,287 293

Wyoming 3,514 154 701 66

Total 1,410,647 24,777 110,148 16,604

Source: GAO analysis of FSA data.

Note: Numbers of participants include individuals, legal entities, and members of entities, all of whom 

are subject to income limits under the 2008 Farm Bill.

Table 4: Farm and Conservation Program Participants Found to Be Ineligible in 2010, by State

State 

Number of 

participants subject to 

income limits

Number of

participants identified 

by IRS as potentially

exceeding income limits

Number of participants 

without consent forms

Number of participants 

ineligible because

of income limits

Alabama 18,785 1,986 351 591

Alaska 58 196 8 . 

American Samoa 7 . 

Arizona 3,113 287 884 53

Arkansas 26,191 775 1,808 389

California 12,970 1,228 3,641 246

Colorado 19,548 523 2,079 108

Connecticut 380 14 135 39

Delaware 1,242 57 147 9 

Florida 4,999 361 1,499 169

Georgia 24,863 713 2,444 153

Guam 1 4 1 

Hawaii 348 27 210 24

Idaho 12,740 419 854 128

Illinois 128,527 2,003 5,263 851

Indiana 64,163 853 2,938 380

Iowa 118,362 1,366 4,753 490

Kansas 102,006 1,734 4,759 776

Kentucky 63,217 631 1,064 523

Louisiana 22,922 635 2,069 693
Appendix IV: Number of Farm and 

Conservation Program Participants Ineligible 

Because of Income Limits, 2009 and 2010

Page 46 GAO-13-741 Farm Income Limits

State 

Number of 

participants subject to 

income limits

Number of

participants identified 

by IRS as potentially

exceeding income limits

Number of participants 

without consent forms

Number of participants 

ineligible because

of income limits

Maine 1,512 25 664 254

Maryland 6,029 223 295 79

Massachusetts 598 38 211 13

Michigan 28,852 217 1,632 158

Minnesota 75,656 582 3,154 287

Mississippi 25,123 728 2,812 194

Missouri 68,662 1,132 3,622 549

Montana 20,558 408 1,564 88

Nebraska 67,492 940 1,238 260

Nevada 343 27 116 11

New Hampshire 364 19 287 97

New Jersey 1,004 56 100 18

New Mexico 5,730 183 1,460 431

New York 11,579 113 1,251 103

North Carolina 29,168 413 1,317 137

North Dakota 42,982 377 1,428 116

Northern Mariana 11 2 

Ohio 56,931 522 2,318 168

Oklahoma 39,978 818 3,982 1,121

Oregon 7,467 293 1,197 107

Pennsylvania 17,884 107 1,319 80

Puerto Rico 716 1,351

Rhode Island 55 12 157

South Carolina 11,276 296 869 208

South Dakota 39,156 594 1,616 232

Tennessee 33,316 538 1,918 314

Texas 91,591 3,084 6,501 1,768

Utah 3,311 98 534 98

Vermont 1,730 41 720 84

Virgin Islands 3 30

Virginia 15,797 299 382 103

Washington 14,483 350 2,113 134

West Virginia 2,611 40 252 17
Appendix IV: Number of Farm and 

Conservation Program Participants Ineligible 

Because of Income Limits, 2009 and 2010

Page 47 GAO-13-741 Farm Income Limits

State 

Number of 

participants subject to 

income limits

Number of

participants identified 

by IRS as potentially

exceeding income limits

Number of participants 

without consent forms

Number of participants 

ineligible because

of income limits

Wisconsin 50,825 327 3,321 204

Wyoming 3,516 160 531 52

Total 1,400,860 25,277 87,013 12,878

Source: GAO analysis of FSA data.
Appendix V: Farm Program Participants 

Determined to Be Eligible for Direct Payments 

in 2009 and 2010

Page 48 GAO-13-741 Farm Income Limits

For 2009 and 2010, FSA’s state offices reviewed documentation for farm 

program participants identified by IRS as having incomes that may have 

exceeded limits for farm income or nonfarm income. Through these 

reviews, state offices determined whether participants were eligible for 

payments under various farm programs, including eligibility for payments 

known as direct payments. These payments consist of fixed annual sums 

based upon a farm’s historical acreage planted in particular commodity 

crops specified in legislation. We chose to include information on direct 

payments because during 2009 and 2010, these payments accounted for 

the largest dollar amounts paid by FSA to participants in its farm 

programs. For 2009 and 2010, respectively, tables 5 and 6 show the 

number of participants reviewed by each state office and the percentage 

determined to be eligible.

Table 5: Participants Determined to Be Eligible for Direct Payments in 2009, by State

State 

Number of 

participants 

reviewed

Number of

eligible participants

Percentage 

eligible

Number of 

ineligible participants

Percentage 

ineligible

Alabama 228 93 40.8% 135 59.2%

Arizona 173 138 79.8 35 20.2

Arkansas 353 219 62.0 134 38.0

California 565 420 74.3 145 25.7

Colorado 49 48 98.0 1 2.0

Connecticut 3 1 33.3 2 66.7

Delaware 23 11 47.8 12 52.2

Florida 59 39 66.1 20 33.9

Georgia 201 114 56.7 87 43.3

Idaho 185 120 64.9 65 35.1

Illinois 801 327 40.8 474 59.2

Indiana 282 152 53.9 130 46.1

Iowa 413 228 55.2 185 44.8

Kansas 598 282 47.2 316 52.8

Kentucky 249 96 38.6 153 61.4

Louisiana 257 102 39.7 155 60.3

Maryland 87 34 39.1 53 60.9

Massachusetts 3 1 33.3 2 66.7

Michigan 92 38 41.3 54 58.7

Minnesota 198 121 61.1 77 38.9

Mississippi 259 165 63.7 94 36.3

Appendix V: Farm Program Participants 

Determined to Be Eligible for Direct 

Payments in 2009 and 2010
Appendix V: Farm Program Participants 

Determined to Be Eligible for Direct Payments 

in 2009 and 2010

Page 49 GAO-13-741 Farm Income Limits

State 

Number of 

participants 

reviewed

Number of

eligible participants

Percentage 

eligible

Number of 

ineligible participants

Percentage 

ineligible

Missouri 464 176 37.9 288 62.1

Montana 68 46 67.6 22 32.4

Nebraska 334 156 46.7 178 53.3

Nevada 7 2 28.6 5 71.4

New Hampshire 2 2 100.0 0.0

New Jersey 12 10 83.3 2 16.7

New Mexico 32 21 65.6 11 34.4

New York 34 22 64.7 12 35.3

North Carolina 156 69 44.2 87 55.8

North Dakota 113 54 47.8 59 52.2

Ohio 130 23 17.7 107 82.3

Oklahoma 302 132 43.7 170 56.3

Oregon 127 78 61.4 49 38.6

Pennsylvania 35 18 51.4 17 48.6

South Carolina 107 35 32.7 72 67.3

South Dakota 209 96 45.9 113 54.1

Tennessee 191 82 42.9 109 57.1

Texas 1,186 569 48.0 617 52.0

Utah 38 19 50.0 19 50.0

Vermont 10 7 70.0 3 30.0

Virginia 67 41 61.2 26 38.8

Washington 90 72 80.0 18 20.0

West Virginia 16 6 37.5 10 62.5

Wisconsin 117 55 47.0 62 53.0

Wyoming 40 34 85.0 6 15.0

Total 8,965 4,574 51.0% 4,391 49.0%

Source: GAO analysis of FSA data.

Table 6: Participants Determined to Be Eligible for Direct Payments in 2010, by State

State 

Number of 

participants 

reviewed

Number of

eligible participants

Percentage 

eligible

Number of

ineligible participants

Percentage 

ineligible

Alabama 211 82 38.9 129 61.1

Arizona 135 107 79.3 28 20.7

Arkansas 377 229 60.7 148 39.3

California 522 388 74.3 134 25.7
Appendix V: Farm Program Participants 

Determined to Be Eligible for Direct Payments 

in 2009 and 2010

Page 50 GAO-13-741 Farm Income Limits

State 

Number of 

participants 

reviewed

Number of

eligible participants

Percentage 

eligible

Number of

ineligible participants

Percentage 

ineligible

Colorado 66 66 100.0 . 0.0

Connecticut 6 4 66.7 2 33.3

Delaware 16 10 62.5 6 37.5

Florida 56 37 66.1 19 33.9

Georgia 184 112 60.9 72 39.1

Hawaii 3 2 66.7 1 33.3

Idaho 179 125 69.8 54 30.2

Illinois 787 326 41.4 461 58.6

Indiana 309 175 56.6 134 43.4

Iowa 446 253 56.7 193 43.3

Kansas 605 302 49.9 303 50.1

Kentucky 230 101 43.9 129 56.1

Louisiana 275 135 49.1 140 50.9

Maryland 78 37 47.4 41 52.6

Massachusetts 7 . 7 . 

Michigan 98 37 37.8 61 62.2

Minnesota 247 165 66.8 82 33.2

Mississippi 241 166 68.9 75 31.1

Missouri 451 198 43.9 253 56.1

Montana 68 49 72.1 19 27.9

Nebraska 327 162 49.5 165 50.5

Nevada 5 1 20.0 4 80.0

New Hampshire 2 2 100.0 0.0

New Jersey 15 10 66.7 5 33.3

New Mexico 28 19 67.9 9 32.1

New York 40 26 65.0 14 35.0

North Carolina 150 78 52.0 72 48.0

North Dakota 141 78 55.3 63 44.7

Ohio 152 40 26.3 112 73.7

Oklahoma 344 147 42.7 197 57.3

Oregon 131 81 61.8 50 38.2

Pennsylvania 45 29 64.4 16 35.6

South Carolina 97 35 36.1 62 63.9

South Dakota 222 121 54.5 101 45.5

Tennessee 205 85 41.5 120 58.5

Texas 1,240 619 49.9 621 50.1
Appendix V: Farm Program Participants 

Determined to Be Eligible for Direct Payments 

in 2009 and 2010

Page 51 GAO-13-741 Farm Income Limits

State 

Number of 

participants 

reviewed

Number of

eligible participants

Percentage 

eligible

Number of

ineligible participants

Percentage 

ineligible

Utah 29 14 48.3 15 51.7

Vermont 8 5 62.5 3 37.5

Virginia 57 26 45.6 31 54.4

Washington 96 80 83.3 16 16.7

West Virginia 10 3 30.0 7 70.0

Wisconsin 111 54 48.6 57 51.4

Wyoming 34 30 88.2 4 11.8

Total 9,086 4,851 53.4% 4,235 46.6%

Source: GAO analysis of FSA data.
Appendix VI: Comments from the Department 

of Agriculture

Page 52 GAO-13-741 Farm Income Limits

Appendix VI: Comments from the 

Department of Agriculture
Appendix VI: Comments from the Department 

of Agriculture

Page 53 GAO-13-741 Farm Income Limits
Appendix VII: GAO Contact and Staff 

Acknowledgments

Page 54 GAO-13-741 Farm Income Limits

Daniel Garcia-Diaz, (202) 512-3841 or garciadiazd@gao.gov

In addition to the individual named above, Thomas M. Cook (Assistant 

Director), Kevin Bray, Ellen W. Chu, Christine Feehan, Les Mahagan, 

Ruben Montes de Oca, Daniel Ramsey, Dan Royer, and Anne RhodesKline made key contributions to this report.

Appendix VII: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 
Related GAO Products

Page 55 GAO-13-741 Farm Income Limits

Farm Programs: USDA Needs to Do More to Prevent Improper Payments 

to Deceased Individuals. GAO-13-503. Washington, D.C.: June 28, 2013.

Farm Programs: Direct Payments Should Be Reconsidered. GAO-12-640. 

Washington, D.C.: July 3, 2012.

Federal Farm Programs: USDA Needs to Strengthen Controls to Prevent 

Payments to Individuals Who Exceed Income Eligibility Limits. 

GAO-09-67. Washington, D.C.: October 24, 2008.

Related GAO Products

(361418)
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