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change affecting farm program payments is causing confusion at the local level, as some producers report being held to outdated rules despite new federal guidance.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
