Rural Money: New Payment Rules Leave Farmers Facing Confusion at Local FSA Offices

New farm payment rules allow LLC members to have separate limits, but some local FSA offices are still applying outdated policies, creating confusion for producers.

Shelly_Muzzall_01_21_19_USA_WA_Three_Sisters_Farm_018.jpg

3 Sisters Family Farm (FarmHER S4, Ep. 9)

FarmHer, Inc.

TOPEKA, Kan. (RFD NEWS) — A major policy change affecting farm program payments is causing confusion at the local level, as some producers report being held to outdated rules despite new federal guidance.

Under the “One Big Beautiful Bill” Act (OBBBA), Congress revised how payment limits apply to pass-through entities, such as LLCs and S corporations. The update allows individual members of those entities to qualify for separate payment limits, rather than being capped at a single limit per entity.

The change was intended to eliminate what industry experts have long called the “person trap,” which previously pushed some operations into more complex business structures to maximize eligibility.

However, implementation has been uneven.

According to agricultural tax and law specialist Roger McEowen and his colleague Paul Neiffer, many local Farm Service Agency offices are still applying the previous “one-entity, one-limit” standard.

That disconnect appears to stem from a lag in training and guidance at the county level. Local offices are now required to verify that each individual within an LLC or S corporation meets the “Actively Engaged in Farming” standard — meaning they must provide proportional labor, management, or capital.

That added verification has created administrative challenges, with some offices defaulting to older interpretations until further direction is provided by state or national leadership.

Producers who are told the rule has not changed may need to take additional steps. Experts recommend consulting the updated FSA Handbook and requesting that local determinations be reviewed or escalated to the state office.

Clear documentation is also critical. Farmers seeking separate payment limits should be prepared to show detailed records of each member’s contributions to the operation.

While the policy shift is widely viewed as a positive for many farm businesses, the rollout highlights a familiar challenge in agriculture policy — changes in Washington do not always translate immediately on the ground.

READ MORE: FSA Entity Confusion — Firm to Farm

Related Stories
President Trump wants to strengthen enforcement of the Packers and Stockyards Act, but R.J. Layher says the Farm Bureau wants USDA to keep three rules in place.
Weaker housing demand is putting more pressure on lumber and timber markets.
Farmers are gaining trust as concerns about food costs and misinformation grow.
Tight cattle supplies continue to put pressure on beef prices.

Marion is a digital content manager for RFD News and FarmHER + RanchHER. She started working for Rural Media Group in May 2022, bringing a decade of digital experience in broadcast media and some cooking experience to the team.

LATEST STORIES BY THIS AUTHOR:

USDA Under Secretary Dudley Hoskins discusses cattle port safeguards, screwworm surveillance, and plans to expand sterile fly production in Texas.
Arlan Suderman of StoneX joined market specialist Tony St. James to discuss the USDA’s October WASDE report and its implications for corn, soybeans, cotton, and commodity demand.
A federal court ruled FSA cannot use an internal handbook to create eligibility restrictions for county committee candidates that are not supported by law or regulation.
New IRS guidance clarifies tax deferral rules for qualifying farmland sales, including requirements for sellers and buyers and limits on installment sales.
Golden Harvest is introducing five new DuraStack and DuraStack-Viptera corn hybrids for 2027, offering new options for corn rootworm and insect management.
Shaun Haney says U.S.-Canada trade tensions have entered a “slow roll,” leaving businesses and farmers uncertain about the future of USMCA.
Nationwide Agribusiness says harvest is a good time for farmers and ranchers to review fire, wind, hail and equipment risks across their operations.
Purdue’s Ag Economy Barometer shows farmer sentiment fell 12 points in September, with input costs as the top concern for a record 52 percent of respondents.
USDA Food Safety Under Secretary Dr. Mindy Brashears explains efforts to expand small processor access, modernize inspection, and improve competition.
Deputy Agriculture Secretary Stephen Vaden explains USDA’s pilot to measure Salmonella levels throughout poultry slaughter and processing.
A recent Wyoming Supreme Court ruling reminds farmers and ranchers that disputes over land access are, ultimately, disputes over property rights.
Rupa Mehta discusses her journey from New York City to rural Pennsylvania and her work telling stories about farm mental health, safety, and agriculture.