​While there are many reasons to enjoy woodland ownership, paying taxes on your property and the income you derive from them certainly aren’t among them. Making sure that you take every tax break to which you’re entitled can make the process slightly less painful.

In this article we’ve included several possibilities for tax savings. While most are focused on federal taxes, your state may also have some tax deductions and programs that could reduce your tax bill. In either case, remember that tax laws are complex. It’s always a good idea to discuss your specific tax situation with your accountant, your lawyer, or your tax professional.

*This post was written by Mary Lou Jay, a regular contributor to WoodsCamp blog and AFF's WoodLand Magazine.

TheU.S. Department of Agriculture is requesting public input on a climate-smart agriculture and forestry strategy. The Notice represents an important step toward implementing President Biden’s Executive Order on Tackling the Climate Crisis at Home and Abroad. The Order, signed January 27, states that, “America’s farmers, ranchers, and forest landowners have an important role to play in combating the climate crisis and reducing greenhouse gas emissions, by sequestering carbon in soils, grasses, trees, and other vegetation and sourcing sustainable bioproducts and fuels.”
 
“USDA is committed to addressing climate change through actions that are farmer, rancher, and forest landowner-focused and that create new market opportunities for the sector in a fair and equitable way,” said Vilsack. “We want your ideas on how to position the agriculture and forestry sectors to be leaders on climate smart practices to mitigate climate change. This includes making the most of USDA programs, developing new USDA-led climate strategies, strengthening existing markets and developing new markets that generate income.”
 
The Notice seeks information on four topics: climate-smart agriculture and forestry; biofuels, bioproducts, and renewable energy; catastrophic wildfire; and meeting the needs of disadvantaged communities through USDA’s climate strategy.
 
The Notice will be available for public input until April 30th, and is available online through the Federal Register.
https://www.federalregister.gov/public-inspection/2021-05287/request-for-comments-executive-order-on-tackling-the-climate-crisis-at-home-and-abroad

The USDA Forest Service is seeking comments from all interested individuals and organizations on the renewal of the  National Woodland Owner Survey
information collection. Comments must be received in writing on or before May 10, 2021.
 
Read the results from Kentucky woodland owner responses to the 2017 and 2018 surveys in the KWOA Winter 2021 Newsletter at https://www.kwoa.net/newsletters.html and on the website New page at https://www.kwoa.net/news/survey-highlights-importance-of-kentucky-family-woodland-owners.
 
Comment Is Invited
Comment is invited on: (1) Whether this collection of information is necessary for the stated purposes and the proper performance of the functions of the Agency, including whether the information will have practical or scientific utility; (2) the accuracy of the Agency’s estimate of the burden of the collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including the use of automated, electronic, mechanical, or other         technological collection techniques or other forms of information technology.
 
For more information on responding to the comment invitation see pages 13520-13522 in Vol. 86, No. 44 of the March 9, 2021 Federal Register.

KWOA encourages members of the Kentucky Woodland Community to contact their legislators in support of  HJR 60, a joint resolution that would direct the Department of Revenue and the University of Kentucky's Forestry and Natural Resources Department to recommend equitable property tax assessment procedures for well-managed forests. Official wording for HJFR 60 is shown below. This resolution reflects the ongoing work of KWOA to advance the sustainability and fair tax treatment of private non-commercial forests. Full wording of HJR 60 is shown below posted on 2/11/2021. Also see the 1/28/21 posting for history and background regarding the resolution.

Please consider taking action now by calling the toll-free message line is 1-800-372-7181, to leave a messages for a legislators as follows:

1. Representative Adam Bowling in support of HJR 60.
2. Your own representative in the KY House of Representatives and ask them to support and co-sponsor HJR 60. To find your legislators email, go to https://apps.legislature.ky.gov/findyourlegislator/findyourlegislator.html
3. Contact your senator in support of HJR 60. Use above find your legislator link to find your senator.

 
 You can track action on HJR 60 here: https://apps.legislature.ky.gov/record/21rs/hjr60.html

​Official Wording for Proposed House Joint Resolution HJR 60

                   A JOINT RESOLUTION directing the Department of Revenue and the University of Kentucky's Forestry and Natural Resources Department to recommend equitable property tax assessment procedures for well-managed forests.
                  WHEREAS, well-managed, family-owned, non-industrial forests are central to providing the raw material that fuels the $13 billion in economic contributions from the forest industry sector annually, and
                  WHEREAS, incentivizing family forest owners, who own the majority of the forestlands in Kentucky, to conduct sound forest practices wiell help sustain the socio-economic benefits that forest resources provide to Kentucky; and
                  WHEREAS, pursuant to House Concurrent Resolution 13 of the 2002 Regular Session of the General Assembly, the Legislative Research Commission issued Research Report No. 307, which identified tax and related policies that had the effect of incentivizing or disincentivizing good forest management practices in the Commonwealth; and
                 WHEREAS, the examination of property tax issues impacting forest management practices in Research Report No. 307 produced conflicting views on how to equitably and constitutionally assess property taxes on well-managed forestlands; and
                 WHEREAS, this lack of agreement and failure to act upon the report's most important findings resulted in continued poor forest management of many forestlands in the Commonwealth and the potential unconstitutional taxation of forestland where sound forest management practices were being implemented; and
                 WHEREAS, significant developments have occurred since the issuance of Research Report No. 307 that would be helpful in finding the best policies for improving the productivity of Kentucky's forests, including the availability of a nationally-recognized standard that could be used by property valuation administrators to define well-managed forests;
NOW, THEREFORE, Be it resolved by the General Assembly of the Commonwealth of Kentucky:
                 ​Section 11.   The Department of Revenue and the University of Kentucky's Forestry and Natural Resources Department shall coordinate together to submit a report to the Legislative Research Commission no later than December 1, 2021, detailing their recommendations for establishing property tax assessment procedures for well-managed forests that ensure equitable taxation of these lands and encourage sound forest management practices that will promote the sustainability of Kentucky’s forests and maximize the socio-economic benefits derived from them.

NRCS in Kentucky is accepting applications from eligible entities for the Agricultural Conservation Easement Program – Agricultural Land Easements (ACEP - ALE).  Applications must be made through eligible entities, not directly from landowners to NRCS.  Please address any questions to Matt Hutchison at matt.hutchison@usda.gov or 859-224-7444. 

The Agricultural Conservation Easement Program – Agricultural Land Easements (ACEP - ALE) focuses on protecting and conserving productive agricultural lands. Landowners are compensated for enrolling their land in easements.

Partners include state or local agencies and certain non-profits. Landowners continue to own their property but voluntarily enter into a legal agreement with a cooperating entity to purchase an easement. The cooperating entity applies for matching funds from NRCS for the purchase of an easement from the landowner, permanently protecting its agricultural use and conservation values. Eligible lands include privately owned cropland, pastureland and forestlands. Landowners do not apply directly to NRCS for funding under this program.

Applications from eligible entities for 2021 ACEP-ALE funding must be received by February 26, 2021 to be considered for the current funding cycle. Landowners who wish to be considered for ACEP-ALE must make application to an eligible entity. Entities interested in agricultural easements should contact their local USDA service center or visit the Kentucky NRCS ACEP-ALE website.

​The U.S. Department of Agriculture is making $12 million available to forest landowners with land enrolled in the Conservation Reserve Program. Landowners and agricultural producers with active CRP contracts involving forest cover can now sign up for the Forest Management Incentive (FMI), which provides financial incentives to encourage healthy forest management practices.
The incentive payment is the lower of:

• The actual cost of completing the practice; or
• 75% of the payment rate offered by USDA’s Natural Resources Conservation Service (NRCS) if the practice is offered through NRCS conservation programs.

CRP signup began Jan. 19, 2021. FSA will announce deadline later this year. Interested producers should contact their local Farm Service Agency office.

Carbon Credits: Carbon credit programs have been around for a long time, but currently are not economically feasible for owners with less than a few thousand acres or so. KWOA director, Jimmie Sizemore reported on two programs that promise to provide benefits for smaller woodland owners:

• First, the Family Forest Carbon Program is a program created by the American Forest Foundation and the Nature Conservancy. The program provides payments to participants who engage in sustainable forestry practices. A pilot program is under way in Pennsylvania. Information can be found at www.forestcarbonworks.org. There are plans to extend the program beyond Pennsylvania.
• Second, SilviaTerra Natural Capital Exchange pays landowners to reduce their annual harvest. The program also is being tested in Pennsylvania. The plan is to extend the program geographically. Details are at www.silviaterra.com/ncapx

This article reflects suggested wording sent to Rep. Adam Bowling for consideration in introducing the house resolution: House Concurrent Resolution 13 was enacted in the 2002 regular Session.  The Resolution was based on the knowledge that:

• well managed family owned non-industrial forests are the key to sustaining socio-economic benefits from Kentucky’s forests including providing the raw material that fuels the $13 billion in economic contributions from the forest industry sector annually, and
• that supporting family forest owners, who own the majority of the forest lands in Kentucky, in conducting sound forest practice is beneficial to sustaining those socio-economic benefits the forest resource provides to Kentucky.

The resolution directed the LRC to study taxes and related policies to identify incentives and disincentives for good forest management practices.  This was an effort to find reasons why so very few woodland owners try to improve the quality of their timber and increase the economic productivity of each acre.  The product of this research was LRC report 307, which is available from LRC.

Recognizing that the issue of the lack of forest management in Kentucky that prompted Resolution 13 in 2002 still exists, we need to revisit 307.  The most important findings were never acted upon, resulting in a continued lack of forest management and the potential unconstitutional taxation of forest land where sound forest management practices were being conducted over the last 19 years. 

The property tax issue in Report 307 produced opposing views that need close examination and resolution.  The University of Kentucky, Department of Forestry and Natural Resources (UK) citing results of a study that found that, "The property tax burden was much greater on forestland than on cropland when measured as a proportion of earnings."  Further this unequal burden was a result of the use of an agricultural land assessment procedure that was not applicable for the equitable valuation of well managed forest lands.  An equal burden is required so the heavier tax burden is unconstitutional according the Kentucky Supreme Court.  However, the Kentucky Department of Revenue cited a Supreme Court ruling that said Kentucky also could not constitutionally mandate a particular valuation method.  As it stands, UK’s analysis of the current forest land assessment methodology indicates an inequity in assessment of managed forest land compared to other agricultural uses and there are means to fix this inequity while avoiding constitutionality issues that have plagued previous deliberations.  Clearly, the billions in economic contributions of our forests to industry and jobs in KY demand that these opposing views be examined and resolved. 

Fortunately, in the nearly two decades since research Report 307 was completed, several significant developments have occurred that should be helpful in finding the best policy for improving the productivity of Kentucky's forests including the development of an equitable forest land assessment procedure that could be used by the Department of Revenue in the assessment of a well-managed forest, and the availability of a nationally recognized standard that can be used by PVAs to define well-managed forests.   
​
Therefore, we resolve that University of Kentucky Department of Forestry and Natural Resources and Kentucky Department of Revenue begin work together to produce an assessment procedure for well managed forests to ensure an equitable taxation of these lands and provide for the encouragement of management to help ensure the sustainability of Kentucky’s forests and maximize the socio-economic benefits derived from them.  We request monthly progress reports given to the sponsor of this resolution (can be written, verbal or electronic).