IRS called in to help meet congressional targets.

USDA is proposing that the Internal Revenue Service review farmers' incomes to help eliminate fraudulent federal crop subsidy claims. USDA says it will rely on RIS to help apply its subsidy eligibility tests, which can bar crop payments to those above a certain income, an issue raised by both President Obama and Agriculture Secretary Tom Vilsack.

"One of the goals of this administration is to make certain that USDA payments are not issued to individuals and entities that exceed income eligibility limits established by law," said Vilsack in a statement. "Once this verification system is fully operational, high-income individuals and entities will be identified by USDA before farm program payments are actually disbursed to them."

Starting with the 2009 crop year, all farmers seeking subsidies will first have to give IRS authority to provide income information to USDA, through IRS Form 8821 or a similar document. Producers not signing the forms will not be eligible for payments. According to the announcement, USDA's Farm Service Agency will not receive actual tax data from farmers, and the department says the Privacy Act and all disclosure laws will be followed.

USDA officials say their inability to get access to IRS records in the past has made it difficult to catch subsidy recipients who exceeded income limits.

A Government Accountability Office report issued last year found 2,702 wealthy people who collected $49 million in subsidies in apparent violation of income rules. However, USDA officials were not allowed to see the names because GAO investigators had used private IRS records to identify them.

The report also found that USDA paid approximately $49 million to ineligible farmers between 2003 and 2006. "The 2008 farm bill will increase the number of individuals likely to exceed the income eligibility caps," GAO said.

The 2008 farm bill substantially lowered the adjusted gross income (AGI) that producers can receive and still maintain subsidy eligibility. Those making more than $500,000 in nonfarm AGI or $750,000 in farm-related AGI are ineligible for payments. The previous law had set a $2.5 million nonfarm cap and had no limit for farm-related AGI. With the lower threshold, "the 2008 farm bill will increase the number of individuals likely to exceed the income eligibility caps," the 2008 GAO report said.

Obama's budget outline proposed lowering the eligibility limit to $250,000 in AGI, but that plan has gotten a chilly reception from key lawmakers. Kind supports the lower income threshold and plans to introduce a separate measure to institute the lower cap.

In response to the proposal, nine Republican members of the House Agriculture Committee wrote to Secretary Vilsack to complain that bringing the IRS into the picture was overreaching on USDA's part. They also complain that the proposal "unnecessarily invades privacy and contravenes the intent of Congress."

The 2008 farm bill contains a provision which would require a farmer to verify his or her income at least every three years by providing a certification signed by "a certified public accountant or another third party that is acceptable to the Secretary." As an alternative, the farmer could verify his or her income by providing "information and documentation ... through other procedures established by the Secretary."

USDA's attorneys may have concluded that the IRS could be considered a "third party that is acceptable to the Secretary" and that asking farmers to submit an IRS Form 8821 is an alternative procedure established by the secretary.