Concerned about government waste, Senators ask about guidance which allows estates to continue collecting farm benefits automatically even two years after the death of a farmer
WASHINGTON – Today, U.S. Senate Committee on Agriculture, Nutrition, & Forestry Ranking Member Debbie Stabenow (D-Mich.), and senior Agriculture Committee member U.S. Senator Chuck Grassley (R-Iowa) raised concerns with the U.S. Department of Agriculture (USDA) Farm Service Agency (FSA) regarding farm program payments that are made to the estates of deceased farmers.
“We must be careful stewards of taxpayer money and work to avoid wasteful payments,” said the Senators. “As we prepare to write the next Farm Bill, we write to request information so we can understand more about USDA payments to an estate after the death of a farmer.”
Under current law, farmers are required to be “actively engaged in farming” in order to receive farm program benefits by providing labor or management. USDA recently issued guidance that considers an estate to be actively engaged – and thus eligible for farm payments –for up to two years after the death of a farmer without review. The Government Accountability Office has criticized USDA payments to estates which have allowed some heirs to game the system and evade payment limits by collecting benefits on behalf of the deceased in addition to their own property.
The full text of the letter is below. A PDF of the letter is available here.
Steven J. Peterson
Farm Service Agency
Dear Acting Administrator Peterson:
We write today with concerns about farm program payments being made to estates of deceased farmers. As you know, the Farm Service Agency (FSA) recently issued guidance for reviewing payment eligibility of estates after the death of the farmer. Under current law, FSA requires farmers to be “actively engaged in farming” in order to receive most program benefits. To be considered actively engaged, a farmer must make significant contributions to the farming operation in active personal labor or active personal management or both. The Farm Service Agency’s recently issued notice (PL-275) suggests that FSA will consider an estate to be actively engaged, and thus eligible for farm program payments, for two crop years after the farmer dies. Additionally, after two crop years, FSA will allow local FSA County Committees to extend that determination on a case by case basis.
There are some circumstances in which it may be reasonable for a deceased farmer’s estate to receive farm program payments, however these should be limited to the current crop year, after which the payments should be attributed to the heir(s) payment limit(s). It is difficult to understand why an estate should remain eligible for farm program payments without needing to consider actively engaged eligibility, payment limitations, and the adjusted gross income limitations of the heirs and direct recipients of the program benefits. Even if an estate remains open for several years, FSA should attribute any payments to the heirs’ payment limit(s) on a pro-rata basis which could avoid the potential for double-dipping. As you know, in the past the Government Accountability Office has criticized USDA’s payments to estates which have in some instances allowed the heirs of those estates to avoid payment limits as the payments to the heirs were able to exceed the payment limits by collecting payments through the estate as well as through their own property. (e.g. GAO-07-818 and GAO-13-503).
We must be careful stewards of taxpayer money and work to avoid wasteful payments. As we prepare to write the next Farm Bill, we write to request information so we can understand more about USDA payments to an estate after the death of a farmer. We ask that you provide the following information no later than March 16, 2018.
Thank you. We look forward to your prompt response.