Semantics Can Be Important

It has been brought to our attention that certain AGR crop insurance policy claims are being denied.  These claims are being made by a single member LLC which is being filed on a schedule F on the farmers personal tax return. An AGR policy is based upon the gross revenue of the farm operation.

A single member LLC is usually disregarded for federal income tax purposes, however the AGR policy requires a tax return be filed in the name of the entity. So to fix this problem we are required to place the name of the LLC on the schedule F with federal identification number.  If these steps are not followed, the claim may be disallowed.

This is a case of where two federal governmental agencies contradict each other  The IRS requires the single member LLC to be disregarded while the RMA requires a return be filed in the name of the entity. In this case it is probably better to get a letter from the IRS than have a million dollar crop insurance claim denied.

We are hoping that an appeal of this will succeed, but you never know.