During the week of April 4th, more than 15,000 taxpayers who received payments directly or indirectly from certain farm and conservation programs received letters from the United States Department of Agriculture/Farm Service Agency (USDA/FSA), requesting either copies of their applicable U.S. income tax returns, a signed letter from their CPA or attorney certifying that their average Adjusted Gross Income (AGI) for the base years did not exceed the applicable AGI limitations, or a signed acknowledgement that income exceeded these limitations.
CPAs should consider the liability and compliance issues prior to providing a letter on behalf of the client, including but not limited to the risk of establishing privity with the USDA/FSA, as well as compliance with AICPA Professional Standards.
It is our understanding that the USDA/FSA is currently evaluating this certification process.
The USDA/FSA will be sending follow-up letters to those individuals who did not respond to the letters sent in April. Clients should contact their state FSA office to request an extension of time to reply to these letters and to obtain updated information. CPAs should consult with their attorney prior to providing a letter to the USDA/FSA on behalf of their client. For more information, please refer to the USDA FSA website at: http://www.fsa.usda.gov/FSA/webapp?area=home&subject=pmel&topic=agi
June 2012
by Accountants Professional Liability Risk Control, CNA, 333 South Wabash Ave., 36S Chicago, IL 60604.
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To the extent this article contains any examples, please note that they are for illustrative purposes only and any similarity to actual individuals, entities, places or situations is unintentional and purely coincidental. In addition, any examples are not intended to establish any standards of care, to serve as legal advice appropriate for any particular factual situations, or to provide an acknowledgement that any given factual situation is covered under any CNA insurance policy. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All CNA products and services may not be available in all states and may be subject to change without notice.
IRS Circular 230 Notice: The discussion of U.S. federal tax law and references to any resources in this material are not intended to: (a) be used or relied upon by any taxpayer for the purpose of avoiding any federal tax penalties; (b) promote, market or recommend any products and/or services except to the extent expressly stated otherwise; or (c) be considered except in consultation with a qualified independent tax advisor who can address a taxpayer’s particular circumstances.
Continental Casualty Company, one of the CNA insurance companies, is the underwriter of the AICPA Professional Liability Insurance Program.
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