Most Frequently Asked Questions about the Average Adjusted Gross Income (AGI) Verification Process
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The 2014 Farm Bill required the implementation of an average adjusted gross income (AGI) limitation of $900,000 for payment eligibility for the 2014 through 2018 programs years. If a person's or legal entity's average AGI for the three taxable years preceding the most immediately preceding complete taxable year for which payments or benefits are requested exceeds this limitation, then the person or legal entity is not eligible for the applicable program payment or benefit.
Participants in CCC programs subject to average AGI rules must annually certify their eligibility to receive benefits by either submitting a statement from a certified public accountant or an attorney, or by completing form CCC-941. If the participant is a general partnership or a joint venture, AGI certifications are required from each member who is an individual or entity, and from each embedded interest holder. If the participant is an entity, AGI certifications are required from the participating entity and from each interest holder who is an individual or entity and from each embedded interest holder.
All AGI certifications filed with FSA are verified with the use of IRS tax data. USDA and the Internal Revenue Service (IRS) have developed an electronic information exchange process strictly for the purpose of average AGI verification. This process electronically looks at certain line items on tax returns filed for the applicable three-year period; performs a series of calculations to arrive at the average amount; and then compares this value to the average AGI limitation. USDA receives the results of this comparison with indicators of whether the participant appears to exceed or not exceed the average AGI amount of $900,000. No actual tax data is made visible or included. The cases that appear to exceed the average AGI limitation are further evaluated by FSA.
Compliance with AGI rules will be tracked through four levels of legal entity ownership. If individuals or entities within those four levels do not comply with average AGI provisions, payments will be reduced by an amount commensurate with the ineligible share.
The average AGI provisions are applicable to the majority of the 2014 and subsequent years’ programs administered by the Farm Service Agency (FSA) and Natural Resources Conservation Service (NRCS).