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Learn about the Conservation Reserve Program (CRP), its different components, sign-up options, and how enrollment in CRP can affect a property's eligibility for Present-Use Value (PUV) classification. Find out the size and income requirements for CRP land and the considerations when enrolling in the program.
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Video • https://www.youtube.com/watch?v=RR_ChWwHoAg
Administration • The provisions of G.S. 105-277.3(d) apply only to land enrolled in the federal Conservation Reserve Program authorized by 16 U.S.C. Chapter 58. • 16 U.S.C. Chapter 58 includes many programs other than CRP, but only land under this classification may qualify.
Administration Cont. • CRP is administered by the Farm Service Agency (FSA) of the United States Department of Agriculture. • Not every program administered by FSA is part of CRP.
Sign-Ups • There are two options: • Periodic • Continuous • All participants must sign-up and be able to show the tax office that application was made and that acceptance into a CRP program was granted.
Components • Conservation Reserve Program (CRP) • Conservation Reserve Enhancement Program (CREP) • Farmable Wetlands Program (FWP) • Bottomland Timber Establishment on Wetlands • Northern Bobwhite Quail Habitat Initiative (Upland Bird Habitat Buffer)
Components Cont. • Wetlands Restoration Initiative • Longleaf Pine Initiative • State Acres for Wildlife Enhancement (SAFE) • CRP is a flexible program and other existing or new programs may be approved under the authority of CRP in the future.
CRP as Present-Use Value • By statute, land enrolled in CRP is considered to be in actual production. • CRP land must be assessed as: • Agricultural land if planted in vegetation • Forestland if planted in trees • Any combination of CRP land and non-CRP land in production may be used to meet the minimum acreage requirement.
Size Requirement • CRP land planted in vegetation: • Must be assessed as agricultural land • Cannot be used to meet the minimum size requirement for forestry classification • CRP land planted in trees: • Must be assessed as forestland • Cannot be used to meet the minimum size requirement for agricultural classification
Income Requirement • Income received from CRP: • Can be used to meet the minimum average gross income requirement for agricultural classification. • Separately or in combination with income from actual production. • CRP payments are generally less than $100 per acre. • It is unlikely that only 10 acres of CRP land would meet the income requirement.
Loss of PUV Eligibility • This would primarily occur in two situations: • The enrollment results in failure to meet the minimum gross income requirement. • No deferred taxes are due. • Lien for deferred taxes is extinguished. • Enrollment requires different classification. • The property may no longer meet the size requirement. • Deferred taxes are due.
Additional Considerations • CRP contracts entered into are generally 10to 15 year contracts. • Exception: • Conservation Priority areas which expire after 5 years. • Contracts may be extended. • Important to review contracts and conduct periodic compliance reviews.
Question • A 20 acre tract, all in agricultural production, is currently in PUV. The property owner enrolls all 20 acres in the Conservation Reserve Program, which is required to be planted in vegetation other than trees. The owner will receive $60 per acre. • Does the property still qualify?
Answer • The tract meets the size requirements since it has at least 10 acres in agricultural production. • The tract meets the average gross income requirement since it will average at least $1,000 gross income per year.
Question • A 12 acre tract, all in agricultural production, is currently in PUV. The property owner enrolls all 12 acres in the Conservation Reserve Program, which is required to be planted in vegetation other than trees. The owner will receive $60 per acre. • Does the property still qualify?
Answer • Total agricultural acreage in production is 12 acres. Average gross income is $720 per year. • The tract does not meet the average gross income requirement since it will not average at least $1,000 gross income per year. • Enrollment in CRP will result in removal from the present-use value program. • However, since the removal is solely due to a change in income caused by enrollment in CRP, no deferred taxes are due as a result of the disqualification.
Question • A12 acre tract, all in agricultural production, is currently in PUV. The property owner enrolls 9 acres in the Conservation Reserve Program, required to be planted in vegetation other than trees. The owner will receive $60 per acre yearly for the CRP land. The 3 acres in actual production average $150 per year in gross income. • Does the property still qualify?
Answer • Total agricultural acreage in production is 12 acres. Average gross income is $690 per year. • The tract does not meet the average gross income requirement since it will not average at least $1,000 gross income per year. • Enrollment in CRP will result in removal from the present-use value program. However, since the removal is solely due to a change in income caused by enrollment in CRP, no deferred taxes are due as a result of the disqualification.
Question • The property is a 20 acre tract, with 15 acres in trees and 5 acres in agricultural production. The property is not in PUV. Owner enrolls all 20 acres in the Conservation Reserve Program. The 15 acres are required to remain planted in trees and the 5 acres are required to be planted in vegetation other than trees. The owner will receive $60 per acre. Owner applies for PUV as either agriculture or forestry. • Does the property qualify for PUV?
Answer • Total forestland in production is 15 acres and total agricultural acreage in production is 5 acres. Average gross income is $1,200 per year. • The tract does not meet the size requirement since it does not have at least 10 acres in agricultural production or at least 20 acres in forestry production.
Question • Property is a 20 acre tract, with 15 acres in trees and 5 acres in agricultural production. The property is not in PUV. Owner enrolls all 20 acres in the Conservation Reserve Program. The 15 acres are required to remain planted in trees and the 5 acres are required to be planted in trees. The owner will receive $60 per acre. The owner plants the 5 acres in trees before January 1 and then applies for forestry PUV. • Does the property qualify for PUV?
Answer • Total forestland in production is 20 acres. • The tract meets the size requirement since it has at least 20 acres in forestry production. • There is no income requirement for forestland.
Question • A 15 acre tract has 5 acres in production for corn, 3 acres in CRP, and 7 acres not in production due to participation in a non-CRP soil conservation program. The 5 acres of corn generates $300 per year. The 3 acres in CRP will generate $180 per year. The 7 acres in the other soil conservation program will generate $600 per year. • Does the property qualify for PUV?
Answer • All three sources of income can be used to meet the income requirement, and will produce an average gross income of $1,080. This amount will be sufficient to meet the $1,000 average gross income requirement. • However, the 7 acres in the non-CRP soil conservation program are not considered to be in actual production. • Only acreage in CRP is considered to be in actual production when it is, in fact, not in production. • Therefore, the 5 acres of corn and the 3 acres of CRP are in production. • Since the tract has only 8 acres in production, the tract will not qualify for PUV since it fails to meet the agricultural size requirement.
