CFAES Give Today
Farm Office

Ohio State University Extension

CFAES

Business and Financial

Stack of W-2 forms.
By: Jeffrey K. Lewis, Esq., Friday, January 14th, 2022

As promised, here is the next and final installment of “An Agricultural Employer’s 2021 Tax Obligations: A Series” discussing an agricultural employer’s requirements and obligations under Ohio law.  This installment of the series provides an overview of Ohio employment taxes and additional employer obligations for Ohio’s agricultural employers.  This series covers an employer’s Ohio tax obligations and requirements that arise simply because a business has employees.  This series does not cover the business income or personal income tax reporting obligations of agricultural employers.  

We first discuss Ohio’s income and school district taxes and then we focus on Ohio’s unemployment insurance tax and Ohio’s workers’ compensation requirement for all employers.  The information contained within this series is not meant to be legal and/or tax advice, it is for educational purposes only.  Agricultural employers should seek out the counsel and guidance of an attorney or other tax professional to help ensure compliance with Ohio tax law.  

Ohio Employer Withholding Tax.   

Ohio Employer Withholding Tax.  Generally, employers are required to withhold Ohio income tax and school district tax from employees’ wages.  However, under Ohio law, Agricultural employers are not required to withhold Ohio taxes from wages paid to employees, so long as the employees fall under the definition of agricultural labor in 26 U.S.C. § 3121(g).  “Agricultural labor” includes all services performed:

  • on a farm, in the employ of any person, in connection with the cultivating, raising, and/or harvesting of any agricultural or horticultural commodity; or
  • in the employ of the owner or other operator of a farm, in connection with the operation, management, conservation, or maintenance of such farm and its tools and equipment. 

Can Ohio’s Agricultural Employers Agree to Willingly Withhold Ohio’s Taxes?  In short, the answer is yes.  An agricultural employee must still pay Ohio income tax and their local school district tax on all income earned throughout the year.  If an employee does not have their Ohio taxes withheld from their pay, they may be required to make quarterly estimated tax payments to the state.  Because of this, an employee may request their employer to withhold their Ohio taxes from each paycheck.  An agricultural employer is under no obligation to withhold Ohio taxes, but some do.    

Ohio Withholding Exemption Certificate.  It is important that each employer, even an agricultural employer, have its employees complete an Employee’s Withholding Exemption Certificate (Ohio IT 4).  For agricultural employers that are not going to withhold Ohio’s taxes, it must have each employee check the box next to “I am exempt from Ohio withholding under R.C. 5747.06(A)(1) through (6)” under Section III of Form IT 4.  If no Ohio IT 4 is completed, then an employer must withhold the Ohio’s taxes from an employee’s wages.  

Ohio requires an employer to keep Ohio IT 4 in its records for at least four years and must make it available to the Ohio Department of Taxation upon request

Registering as an Ohio Withholding Agent.  Employers that are required (or choose) to withhold Ohio’s taxes from employees’ wages must register with the Ohio Department of Taxation. This can be done one of three ways. 

  1. By internet.  Registration can be completed online through the Ohio Business Gateway
  2. By phone. Call 1-888-405-4089, listen for the message, and then press 2 to connect with an agent. 
  3. By mail or fax.  Complete Application for Registration as an Ohio Withholding Agent (Ohio IT 1) and mail it to the address provided on the form or fax it to the Ohio Department of Taxation at (614) 387-2165. 

How Much Ohio Income Tax Should an Employer Withhold?  To determine how much Ohio income tax to withhold, visit the Ohio Department of Taxation’s Employer Withholding Tables website

How Much School District Tax Should an Employer Withhold?  School districts impose a tax using one of two methods: traditional or earned income.  School district tax rates and a district’s method of taxation can be found on the Ohio Department of Taxation’s "Employer Withholding: Table of Contents" website.  

For traditional tax base school districts, an employer must use the same wage base and number of exemptions they use when calculating the employee’s Ohio income tax rate.  For earned income tax base school districts, an employer must withhold at a flat rate equal to the school district’s tax rate with no reduction or adjustment for personal exemptions. 

An employee’s school district is determined by the address of the employee’s residence.  School districts and the corresponding four-digit codes can be found at https://www.tax.ohio.gov/finder or by contacting the applicable county auditor. 

Electronic Filing Requirement.  Employers are required to file and pay Ohio income and school district withholding taxes electronically.  The easiest way to do this is through the Ohio Business Gateway.  

Filing Frequency and Payment of Ohio’s Employer Withholding Tax.  An employer’s filing frequency is determined by the combined amount of Ohio and school district income taxes that were withheld or required to be withheld during the look-back period.  Ohio’s look-back period is the 12-month period ending June 30th of the preceding calendar year.  An employer’s filing frequency is re-evaluated every year.  

Ohio’s Income Tax Filing Frequency

Quarterly.  Ohio employers that withheld $2,000 or less in Ohio taxes will be required to file and pay taxes every calendar quarter.  Ohio’s form IT 501 and payment are due by the last day of the month following each calendar quarter.  

Monthly.  Ohio employers that withheld more than $2,000 but less than $84,000 in Ohio taxes will be required to file and pay taxes every month.  Form IT 501 and payment are due within 15 days after the end of each month.  

Partial-weekly.  Ohio employers that withheld $84,000 or more in Ohio taxes are required to make payment of withheld taxes within three banking days from the end of each “partial-weekly period.”  There is no form that is required to be filed each time tax payments are filed.  There are two “partial-weekly periods” in which an employer can be categorized.  An employer’s partial weekly period depends on the day it issues payroll.   

Partial-weekly Period 1:  An employer is in period 1 if it issues payroll on Saturday, Sunday, Monday, or Tuesday. 

Partial-weekly Period 2:  An employer is in period 2 if it issues payroll on Wednesday, Thursday, or Friday.

Remember, payment is due within three banking days from the end of each period.  So, if an employer issues payroll on Wednesday, it must submit payment of Ohio taxes within three banking days starting on Friday. 

School District Tax Filing Frequency.  School district tax filing frequency is the same as an employer’s Ohio income tax filing frequency except for employers that qualify as partial-weekly filers.  Partial-weekly employers are required to file school district tax on a monthly basis.  Every time an employer files and remits the school district tax they must complete “Payment of School District Income Tax Withheld” (Ohio SD 101), which can be found on the Ohio Business Gateway.  

Quarterly and Annual Forms.  An employer’s filing obligations do not end by filing the above forms each time it remits payment of Ohio’s taxes.  The following are additional forms that must be completed by an employer either on a quarterly or yearly basis.  Not every form listed below needs to be completed by every employer.  Certain forms correspond with an employer’s filing frequency classification.  These forms can be found on the Ohio Business Gateway.  

Quarterly/Monthly Filers.  Employers that qualify to file and pay Ohio income taxe on a quarterly or monthly basis must file an “Annual Reconciliation of Income Tax Withheld” (Ohio IT 941).  Ohio IT 941 is typically due no later than January 31 of the following year (the 2021 tax year deadline has been extended to March 2, 2022).  The total tax withheld on Ohio IT 941 must equal the amount reported on Ohio IT 3 (discussed below).  

Partial-weekly Filers.  Employers that must pay Ohio taxes on a partial-weekly basis must file a “Quarterly Reconciliation of Income Tax Withheld” (Ohio IT 942) by the last day of each month following a calendar quarter for the 1st, 2nd, and 3rd Quarters.  A different Ohio IT 942 form titled “4th Quarter/Annual Reconciliation of Income Tax Withheld” is to be filed by partial-weekly employers by January 31 of the following year (the 2021 tax year deadline has been extended to March 2, 2022).  Partial-weekly employers do not submit Ohio IT 941.  

“Transmittal of W-2 and 1099-R Statements” (Ohio IT 3).  All employers must submit Ohio IT 3, which can be done electronically on the Ohio Business Gateway.  Ohio IT 3 requires an employer to report and upload employee W-2s/1099-Rs.  The amount of Ohio taxes withheld and paid by an employer must match the information contained within the W-2s and 1099-Rs.  Ohio IT 3 is usually due by January 31 of the following year (the 2021 tax year deadline has been extended to March 2, 2022).

“Annual Reconciliation of School District Income Tax Withheld” (Ohio SD 141). Employers must also submit Ohio SD 141, which can be done electronically on the Ohio Business Gateway.  Ohio SD 141 compares the amount of school district tax withheld and paid by an employer and the information contained within the W-2s and 1099-Rs uploaded when an employer files Ohio IT 3 (see above).  The amount of school district tax withheld and paid should match the information contained within the W-2s and 1099-Rs submitted by an employer.  Ohio SD 141 is usually due by January 31 of the following year (the 2021 tax year deadline has been extended to March 2, 2022).

Ohio Unemployment Insurance Tax. 

When are Agricultural Employers required to pay Ohio’s Unemployment Insurance? Agricultural employers must pay the Ohio Unemployment insurance tax if it: 

  • Paid cash wages of $20,000 or more in a calendar to agricultural employees in the current calendar year or the preceding calendar year; or 
  • Had at least 10 agricultural employees for some portion of a day in 20 different weeks in the current year or the preceding year

Other Ways Employers can Become Liable for Ohio’s Unemployment Insurance Tax.  An employer can also be required to pay the Ohio Unemployment Insurance tax if it:

  1. Is subject to the Federal Unemployment Tax Act (“FUTA”) in either the current calendar year or preceding calendar year.  
  2. Acquires a business that was subject to Ohio’s unemployment insurance tax. 
  3. Elects to cover its employees voluntarily. 

Employer Must Report Its Own Liability.  Employers are required to report liability by filing “Report to Determine Liability” (JFS 20100) to the Ohio Department of Job and Family Services (the “ODJFS”), which can be done online at https://thesource.jfs.ohio.gov.   The ODJFS will determine an employer’s liability based on the information provided in JFS 20100.  If an employer is deemed to be liable for Ohio Unemployment Insurance, the ODJFS will issue a 10-digit employer account number.  

Employer Reporting.  Liable employers are required to file quarterly reports to the ODJFS.  Agricultural employers that must pay into the Ohio unemployment insurance fund must file the “Employer’s Wage Detail Report” and the “Quarterly Summary Report.” Employers who had no workers or paid no wages during a quarter are still required to file the above-mentioned reports.  Employers with fewer than 200 employees should file their quarterly reports by using the Ohio Business Gateway or ODJFS’s “The SOURCE Online”  The reports must be filed no later than the last day of the month following the end of a calendar quarter.  

Employer Contributions.  Like FUTA, only the employer is responsible for Ohio’s unemployment insurance tax. Payments made into the Unemployment Insurance Trust Fund are called “contributions.”  Contribution rates are determined by an employer’s “experience rating” which is a measure of how much an employer has paid in unemployment taxes and has been charged in benefits.  For more information about contribution rates, visit https://jfs.ohio.gov/ouio/uctax/rates.stm.

Contributions are due no later than the last day of the month following the end of a calendar quarter.  To determine how much tax is due each quarter, an employer multiplies its unemployment tax rate by the amount of taxable wages paid during the quarter.  Contributions must be made each quarter until the “taxable wage base” for each employee has been met.  The taxable wage base for 2022 is $9,000.  This means that an employer is only required to pay its unemployment insurance tax rate on the first $9,000 dollars earned by each employee.  If an employer is unable to make a contribution, the unpaid balance will bear an annual interest rate of 14%, compounded monthly.  

Ohio Workers’ Compensation

While not technically a “tax,” every employer in the state of Ohio, with one or more employees, must have workers’ compensation coverage.  This includes agricultural employers.  There are, however, certain businesses that do not have to carry workers compensation coverage.  These businesses include: 

  • Sole proprietors with no employees
  • Partnerships with no employees
  • Family farm corporations with no employees
  • Limited liability company acting as a sole proprietorship with no employees
  • Limited liability company acting as a partnership with no employees

As you can see, the common attribute shared by the exempt businesses listed above is the fact that those businesses have no employees.  What this means is that if anyone, other than an owner, is performing services for a business and being paid for those services, then the business is required to carry workers’ compensation coverage.  So, for example, if a couple owns and operates a small family farm corporation and only the couple performs the work on the farm, then workers’ compensation coverage is not required.  

Elective Workers’ Compensation Coverage.  For those employers that are not required to carry workers’ compensation coverage, they may still elect to do so.  Oftentimes, businesses elect to carry workers’ compensation insurance to prevent the devastating side effects of a serious injury sustained by an owner.  Using the example of the family farm corporation from above, if the couple decides not to carry workers’ compensation coverage and one of them is injured while farming, their health insurance company may deny their claim because the injury was work-related.  Generally, on-the-job injuries must be covered through workers’ compensation, not an individual’s health insurance.  So, the couple could begin to amass a large sum in medical bills due to the lack of insurance coverage, possibly bankrupting the farm corporation.    

Applying for Workers’ Compensation Coverage.  Employers required to carry workers’ compensation coverage must apply for coverage by submitting the “Application for Coverage (U-3)” to Ohio’s Bureau of Workers’ Compensation (“BWC”) which can be found at https://www.bwc.ohio.gov/employercoverage.  Employers electing to obtain coverage can apply by submitting the “Application for or Request to Cancel Elective Coverage (U-3S)” which can be found by visiting https://info.bwc.ohio.gov/wps/portal/gov/bwc/for-employers/employer-forms/application-for-request-cancel-elective-coverage.

Workers’ Compensation Premiums.  The BWC calculates an employer’s premium based on several factors, including total payroll, type of work performed by employees, and an employer’s workplace injury record.  

Premium Payments.  Installment payments of an employer’s premium is based upon a schedule chosen by the employer.  The BWC will send an invoice to each employer for premium/installment payments.  Payments can be made through an e-account on the Ohio Bureau of Workers’ Compensation website

Alternative Premium Rate Plans.  It's no secret that workers' compensation insurance can be a costly expense for an employer.  However, the BWC does have alternative premium rate plans for employers looking to reduce the cost of workers' compensation insurance.  These alternative rate plans allow employers that operate similar businesses to join together to potentially achieve a lower premium rate than they could obtain as individual employers.  For more information on alternative premium rate plans visit https://www.bwc.ohio.gov/downloads/blankpdf/altrate.pdf 

Conclusion.  This series was split into two posts because of the massive amount of information presented.  However, the broad overview of this series was very surface level.  There are many exemptions, exceptions, alternate requirements, or additional requirements based on an employer’s unique circumstances that we did not cover for the sake of brevity.  That is why is it important to speak with an attorney or other tax professional so that they can help you navigate federal and state tax laws to make sure you are fulfilling your obligations as an employer and to address any questions or concerns that you may have.  

References and Resources: 

Ohio Administrative Code Chapter 4123, Bureau of Workers’ Compensationhttps://codes.ohio.gov/ohio-administrative-code/4123

Ohio Bureau of Workers’ Compensation, BWC Basics for Employershttps://www.bwc.ohio.gov/downloads/blankpdf/BWCBASICS.pdf

Ohio Bureau of Workers’ Compensation, Workers’ Compensation Overviewhttps://info.bwc.ohio.gov/wps/portal/gov/bwc/for-employers/workers-compensation-overview

Ohio Department of Job and Family Services, Employer’s Guide to Ohio Unemployment Insurance,http://www.odjfs.state.oh.us/forms/num/JFS08201/pdf/  

Ohio Department of Job and Family Services, Unemployment Insurance: Employer Resource Hubhttps://unemploymenthelp.ohio.gov/employer/

Ohio Department of Job and Family Services, UI Tax for New Employershttps://jfs.ohio.gov/ouio/uctax/UITaxForNewEmployers.stm

Ohio Department of Taxation, 2022 Ohio Employer and School District Withholding Tax Filing Guidelines,https://tax.ohio.gov/static/employer_withholding/2021%20filing%20guidelines%20updates_rev%2012-22-21.pdf

Ohio Department of Taxation, Estimated Paymentshttps://tax.ohio.gov/wps/portal/gov/tax/individual/resources/estimated-payments

Ohio Revised Code Chapter 4141, Unemployment Compensationhttps://codes.ohio.gov/ohio-revised-code/chapter-4141

Ohio Revised Code Chapter 4123, Workers’ Compensationhttps://codes.ohio.gov/ohio-revised-code/chapter-4123

Ohio Revised Code Chapter 5747, Income Taxhttps://codes.ohio.gov/ohio-revised-code/chapter-5747

Ohio Revised Code Chapter 5748, School District Income Taxhttps://codes.ohio.gov/ohio-revised-code/chapter-5748

 

 

 

 

 

 

 

Multiple W-2 forms.
By: Jeffrey K. Lewis, Esq., Tuesday, January 11th, 2022

As we settle into 2022 and regroup after a busy holiday season, one of things an agricultural employer should be thinking about is taxes, more specifically, have they met their obligations when it comes to federal and state employment taxes.  In this two-part series, we discuss the federal and state taxes that an employer is required to withhold from employees’ wages and the tax obligations that an agricultural employer is solely responsible for.  This series covers the taxes and obligations an employer has because of the wages paid to employees.  This series does not cover the business income or personal income tax reporting obligations of agricultural employers.  

The first part of this series focuses on federal taxes and an employer’s obligations when it comes to social security, Medicare, federal income, and federal unemployment taxes. We also discuss when to pay the taxes and how to pay them.  The information contained within this series is not meant to be legal and/or tax advice.  Agricultural employers should seek out the counsel and guidance of an attorney or other tax professional to help them ensure they are compliant with their obligations under federal tax law.

Social Security and Medicare Taxes.  Generally speaking, an employer must withhold social security and Medicare taxes from the wages it pays its employees.  However, there are special rules for agricultural employers.  The $150 Test or the $2,500 Test will help determine if an agricultural employees’ wages are subject to social security and Medicare taxes along with federal income tax withholding requirements.  

All cash wages that an employer pays to an employee during the year for farmwork is subject to social security, Medicare, and federal income tax withholding requirements if either of the following tests are met: 

  • The $150 Test.  An employer pays cash wages to an employee of $150 or more in a year for farmwork. 
    • This includes all cash wages paid on a time, piecework, or other basis. 
  • The $2,500 Test.  The total that an employer paid for farmwork (cash and non-cash wages) to all employees is $2,500 or more during the year. 

Annual cash wages of less than $150 paid to a seasonal farmworker are not subject to social security and Medicare taxes, or federal income tax withholding, even if an employer pays all farmworkers $2,500 or more.  However, these wages do count towards the $2,500 Test to determine whether other farmworkers’ wages are subject to social security and Medicare taxes. 

Social Security Tax Rate.  The social security tax is 6.2% for both the employee and the employer on the first $142,800 paid to each employee in 2021.  This means that an employer must withhold 6.2% of the employee’s wages for social security and the employer must match the 6.2%.  

Medicare Tax Rate.  The Medicare tax rate is 1.45% for each employee, on all wages earned.  An employer must withhold Medicare taxes from an employee’s wages and pay a matching amount.  

Federal Income Tax Withholding.  An agricultural employer must withhold federal income tax from the wages of farmworkers if the wages are subject to social security and Medicare taxes (i.e. is the $150 Test or $2,500 Test met?).  The amount of federal income tax withheld is determined by the gross wages paid to an employee (before any taxes are taken out). 

To know how much federal income tax to withhold from an employee’s wages, an employer should have a Form W-4  (“W-4) on file for each employee.  The Internal Revenue Service (“IRS”) redesigned Form W-4 for 2020 and beyond.  The new W-4 no longer asks employees to report the number of withholding allowances they are claiming.  The IRS encourages employees to file an updated W-4, but it is not a requirement to help determine the employee’s federal income tax withholding. 

How much does an employer withhold for federal income tax?  The best answer a lawyer can give to this question is, it depends.  Luckily, the IRS has provided a tool to help employers determine the amount of federal income tax to withhold from an employee’s wages.  The Income Tax Withholding Assistant for Employers allows employers to enter an employee’s W-4 information to calculate the amount of federal income tax to withhold.  Note: The Income Tax Withholding Assistant will not be available after 2022.  The IRS suggests using the Income Tax Withholding Assistant to become familiar with how to use the worksheets and tables in Publication 15-T to be able to calculate the amount of federal income tax to withhold after 2022.   

What if my employee claims he or she is exempt from federal income tax withholding?  An employee may claim an exemption from federal income tax withholding because they had no federal income tax liability last year and they expect to have no income tax liability this year.  However, the employee’s wages are still subject to social security and Medicare taxes. 

To claim the exemption, an employee must indicate the exemption on their W-4.  The exemption is not permanent and is only for that year.  To continue to be exempt, an employee must provide their employer a new W-4 by February 15.  If an employee does not provide a new W-4 by February 15, the employer is required to start withholding federal income tax as if the employee had checked the Single or Married filing separate box on their W-4.  If an employee provides a new W-4 after the February 15 deadline, an employer may apply the exemption to future wages but should not refund any taxes withheld while the exempt status was not in place.  

Notice to Employees About Earned Income Credit (“EIC”).  An employer must notify employees who have had no federal income tax withheld that they may be eligible for a tax refund because of the EIC.  One easy way an employer can meet this requirement is by having the EIC notice on the back of the Form W-2 issued to all employees.  

Depositing Social Security, Medicare, and Federal Income Taxes.  Employment taxes must be deposited by electronic fund transfer (“EFT”).  Normally, an EFT is made to the federal government using the Electronic Federal Tax Payment System (“EFTPS”).  EFTPS is a free service provided by the Department of Treasury.  For more information on EFTPS visit EFTPS.gov or call 800-555-4477.  If an employer does not want to use EFTPS, it can arrange for its tax professional, financial institution, payroll service, or other trusted third party to make electronic payments on its behalf.  

When to Deposit Social Security, Medicare, and Federal Income Taxes.  An agricultural employer’s deposit schedule is determined from the total tax liability reported on Form 943, line 13, for the lookback period.  The lookback period is the second calendar year preceding the current calendar year.  Since we are in 2022, the lookback period will be 2020.  This means that an employer’s status as either a “monthly schedule depositor” or “semiweekly schedule depositor” will be determined by the amount on Form 943, line 13 from 2020.  

The terms “monthly schedule depositor” or “semiweekly schedule depositor” are not based on how often an employer pays its employees or how often it will be required to make tax deposits.  The terms simply identify which set of rules an employer must follow.  As discussed above the deposit schedule an employer must follow is determined by the total tax liability reported on Form 943, line 13.  For 2022, an employer is a: 

  • Monthly schedule depositor if it reported $50,000 or less in 2020. 
  • Semiweekly schedule depositor if it reported more than $50,000 in 2020. 

Monthly Deposit Schedule.  If an employer is a monthly schedule depositor, it must deposit employment taxes on wages paid during a calendar month by the 15th day of the following month.  If an employer does not pay any wages in a calendar month, it has no deposit requirement for the following month. 

Semiweekly Deposit Schedule.  If payday falls on a Wednesday, Thursday, or Friday, then an employer must deposit taxes by the following Wednesday.  If payday falls on a Saturday, Sunday, Monday, or Tuesday, then an employer must deposit taxes by the following Friday.   This is a very simplified explanation and assumes an employer has one payday for all employees.  If an employer has multiple paydays for different employees, it should speak with an attorney or other tax professional to help determine when taxes should be deposited. 

Federal Unemployment Tax Act (“FUTA”).  FUTA, in conjunction with state unemployment systems, provides unemployment compensation to workers who have lost their jobs.  Most employers pay both federal and state unemployment taxes.  Additionally, only the employer is responsible for the FUTA tax, nothing is withheld from an employee’s wages for FUTA.    

Agricultural Employers and FUTA.  An agricultural employer is required to file Form 940 and pay FUTA tax if it: 

  • Paid cash wages of $20,000 or more to farmworkers in any calendar quarter in 2021 or 2022, or 
  • Employed 10 or more farmworkers during at least some part of the day (whether or not at the same time) during any 20 or more different weeks in 2021 or 20 or more different weeks in 2022.  

When determining whether an employer meets either test above, employers must count the wages paid to H-2A workers, even though the wages paid to H-2A workers are not subject to FUTA. 

Form 940 Due Date.  Form 940 is due by January 31.  If an employer made deposits on time and in full, they may file Form 940 by February 10. 

FUTA Tax Rate.  The FUTA tax rate is 6% for 2021.  The tax applies to the first $7,000 an employer pays to each employee.  There is a tax credit that may be applied against the FUTA tax rate for any amounts paid into state unemployment funds.  The maximum credit is 5.4%.  An employer is entitled to the maximum credit if it paid state unemployment taxes in full, on time, and on all the same wages that are subject to FUTA.  Visit the instructions for filing Form 940 for further FUTA tax credit guidance.  

Depositing FUTA Tax.  FUTA taxes are deposited by EFT and are generally deposited on a quarterly basis.  To calculate an employer’s FUTA tax, it should multiple the amount of wages paid to employees by .6% during the quarter.  This percentage may have to be adjusted depending on an employer’s entitlement to the FUTA tax credit for state unemployment contributions.  When an employee’s wages reach $7,000 for the calendar year, an employer does not have to figure any additional FUTA tax for that employee.  

Conclusion.  The above information is a very general overview of an employer’s tax obligations when it comes to its employees.  As you can see, federal tax law can be daunting.  We barely scratched the surface when it comes to specific exemptions or additional obligations for an agricultural employer.  For example, agricultural employers may not always employ farmworkers or employees “engaged in agriculture.”  The requirements and obligations of an employer that employs both farmworkers and non-farmworkers be may different than what is discussed above.  Therefore, we cannot stress enough, the importance of speaking with an attorney or other tax professional so they can help you navigate federal tax law and your obligations as an employer. 

Look out for our next and final installment of “An Agricultural Employer’s 2021 Tax Obligations: A Series” where we will be discussing an agricultural employer’s requirements and obligations under Ohio tax law.  

References and Resources

Internal Revenue Service, Publication 15 - (Circular E), Employer's Tax Guidehttps://www.irs.gov/pub/irs-pdf/p15.pdf 

Internal Revenue Service, Publication 15-A - Employer's Supplemental Tax Guidehttps://www.irs.gov/pub/irs-pdf/p15a.pdf

Internal Revenue Service, Draft Publication 51- (Circular A), Agricultural Employer's Tax Guidehttps://www.irs.gov/pub/irs-dft/p51--dft.pdf

Internal Revenue Service, Publication 225 - Farmer's Tax Guidehttps://www.irs.gov/pub/irs-pdf/p225.pdf 

 

 

By: Barry Ward, Saturday, January 01st, 2021

The Ohio Farm Custom Rates Survey data collection has launched once again. The online survey for 2022 is available at: https://go.osu.edu/ohiofarmcustomratesurvey2022

 

A large number of Ohio farmers hire machinery operations and other farm related work to be completed by others. This is often due to lack of proper equipment, lack of time or lack of expertise for a particular operation.  Many farm business owners do not own equipment for every possible job that they may encounter in the course of operating a farm and may, instead of purchasing the equipment needed, seek out someone with the proper tools necessary to complete the job. This farm work completed by others is often referred to as “custom farm work” or more simply “custom work”. A “custom rate” is the amount agreed upon by both parties to be paid by the custom work customer to the custom work provider.

 

Custom farming providers and customers often negotiate an agreeable custom farming machinery rate by utilizing Extension surveys results as a starting point. Ohio State University Extension collects surveys and publishes survey results from the Ohio Farm Custom Survey every other year. This year we are updating our published custom farm rates for Ohio.

 

We kindly request your assistance in securing up-to-date information about farm custom work rates, machinery and building rental rates and hired labor costs in Ohio.

 

This year we have an online survey set up that anyone can access. We would ask that you  respond even if you know only a few rates.  We want information on actual rates, either what you paid to hire custom work or what you charged if you perform custom work. Custom Rates should include all ownership costs of implement & tractor (if needed), operator labor, fuel and lube. If fuel is not included in your custom rate charge there is a place on the survey to indicate this.

 

You may access the survey at: https://go.osu.edu/ohiofarmcustomratesurvey2022

If you prefer a document that you can print out and fill out by hand to return, email Barry Ward at ward.8@osu.edu

 

The deadline to complete the survey is March 31, 2022.

Posted In: Business and Financial, Crop Issues
Tags:
Comments: 0
Moose standing in snowy environment.
By: Jeffrey K. Lewis, Esq., Friday, December 10th, 2021

Did you know that a male moose loses its antlers every year? Moose usually lose their antlers every winter and grow new ones in the spring.  Additionally, because of the lack of antlers during the winter months, a moose’s first line of defense is its sharp hooves, which can mortally wound a wolf or bear.  This edition of the Ag Law Harvest kicks around a few USDA announcements and FDA rule proposals and sheds some light on overtime compensation for California’s agricultural workers.      

USDA announces new micro-farm insurance policy.  The U.S. Department of Agriculture’s (“USDA”) Risk Management Agency (“RMA”) announced that the USDA has developed a new micro farm insurance policy for agricultural producers with small-scale farms who sell locally.  The new insurance policy seeks to simplify recordkeeping and introduces insurance coverage for post-production costs and value-added products.  Farm operations that earn an average allowable revenue of $100,000 or less, or for carryover insureds, that earn an average allowable revenue of $125,000 or less are eligible for the policy.  The new insurance policy will be available for the 2022 crop year.  Crop insurance is sold and delivered sole through private crop insurance agents, a list of which can be found at the RMA Agent Locator.

USDA accepting applications to help rural communities get access to internet.  The USDA announced that it has begun accepting applications for up to $1.15 billion in loans and grants to help rural communities gain access to high-speed internet.  The announcement follows the recently enacted infrastructure bill, which provides another $2 billion in additional funding for USDA’s ReConnect Program.  According to the USDA, the funding will be available for projects that serve rural areas where at least 90% of the households lack broadband service at speeds of 100 megabits per second (Mbps) (download) and 20 Mbps (upload).  The USDA will give funding priority to projects that will serve people in low-density rural areas and areas lacking internet service speeds of at least 25 Mbps (download) and 3 Mbps (upload).  In making the funding decisions, the USDA will consider the economic needs of the community to be served and the extent to which a provider will offer affordable service options to the community.  

FDA proposing changes to testing requirements of pre-harvest agricultural water.  The Food and Drug Administration (“FDA”) published a proposed rule that would change some provisions of the FDA’s Produce Safety Rule.  The proposed rule seeks to replace the microbial criteria and testing requirements for pre-harvest agricultural water for covered produce other than sprouts.  Some of the proposed changes include: 

  • Replacing the microbial quality criteria and testing requirements with new provisions for conducting pre-harvest agricultural water assessments for hazard identification and risk management purposes; 
  • A new testing option for certain covered farms that elect to test their pre-harvest agricultural water for generic Escherichia coli (“E. coli”);
  • Providing additional flexibility in responding to findings from pre-harvest agricultural water assessments; 
  • Expedited implementation of mitigation measures for known or reasonably foreseeable hazards related to certain adjacent and nearby land uses; and 
  • Required management review of pre-harvest agricultural water assessments. 

The FDA is accepting comments on the proposed rule until April 5, 2022.  

California’s overtime compensation for agricultural workers. In 2016, California passed Assembly Bill No. 1066 that slowly implemented overtime wages for California’s agricultural workers.  Beginning in 2022, agricultural employees are entitled to one-half times their regular rate of pay for all hours worked over eight hours in any workday or over 40 hours in any workweek.  However, the law only affects agricultural employers with 26 or more employees.  Agricultural employers with 25 or fewer employees will be required to follow the same overtime compensation structure beginning in 2025.  California will also begin to require that any work performed by an agricultural employee in excess of 12 hours in any workday be paid twice their regular rate of pay.  Again, this provision only effects agricultural employers with 26 or more employees but will go into effect for all agricultural employers in 2025.  

 

Yellow yield sign with text stating "Minimum Wage Increase Ahead."
By: Jeffrey K. Lewis, Esq., Friday, December 03rd, 2021

As 2021 winds down, it is always good to plan for the new year.  Part of that planning includes making sure, as an employer, you are compliant with any updates to current law as we turn the calendars to 2022.  One law that is changing next year, is Ohio’s minimum wage law.  Beginning January 1, 2022, the Ohio minimum wage will rise to $9.30, up from the current $8.80, for non-tipped employees.  However, as an agricultural employer, the law provides some exemptions to paying federal or state minimum wage. In this post, we review minimum wage requirements, agricultural exemptions to minimum wage, and who qualifies for the agricultural exemptions. 

Ohio versus federal minimum wage.  As discussed above, Ohio’s minimum wage will rise to $9.30 for non-tipped employees but federal minimum wage will remain at $7.25.  An agricultural employer is required to follow both state and federal laws, but when the two sets of laws differ, there may be some confusion about which one applies.  Normally, federal law reigns supreme and usually preempts, or overrides, state law.  But in this case, the federal law sets the floor for minimum wage.  This means that employers across the country that are subject to the Fair Labor Standards Act (“FLSA”) cannot pay less than $7.25 per hour to their employees.  However, if a state law requires that employers pay their employees more than the federal minimum wage, then the employer must meet the state’s minimum wage standard.  Thus, Ohio employers must pay the Ohio minimum wage, unless an exemption applies. 

Ohio’s “small employer” exemption. Starting in 2022, Ohio employers that grossed less than $342,000 in 2021 are not required to pay Ohio’s $9.30 minimum wage.  Instead, those employers are required to pay the $7.25 federal minimum wage to their employees, unless another exemption applies. 

Ohio and federal agricultural exemptions.  Under both Ohio and federal law, agricultural employers are exempt from paying the federal or Ohio minimum wage to their employees if any of following apply: 

  1. The employer did not use more than 500 man-days of agricultural labor during any calendar quarter during the preceding year. 
  2. The employee is the parent, spouse, child, or other member of the employer’s immediate family. 
  3. The employee: 
    1. is employed as a hand-harvest laborer; 
    2. is paid on a piece-rate basis; 
    3. commutes daily from their permanent residence to the farm; and 
    4. was employed in agriculture for less than 13 weeks during the previous calendar year. 
  4. The employee is: 
    1. 16 years of age or younger; 
    2. employed as a hand-harvest laborer; 
    3. paid on a piece-rate basis; 
    4. employed on the same farm as their parent or legal guardian; and 
    5. paid the same piece-rate wage as employees over the age of 16. 
  5. The employee is engaged in range production of livestock. 

500 man-days exemption.  The “man-days” exemption was intended to exempt small and family-sized farms.   A “man-day” is any day during which an employee performs at least one hour of agricultural labor.  To calculate a “man-day”, an agricultural employer needs to keep track of the number of people who worked each day and for how long.  500 “man-days” is roughly equal to having seven employees working for at least one hour each, five days a week during a calendar quarter.  It is also not just full-time employees that are counted towards the 500 “man-day” exemption, temporary and seasonal workers also count towards the “man-day” exemption.  

Family member exemption.  An agricultural employer is not required to pay family members the minimum wage.  This family member exemption applies to employees engaged in agriculture and are either the parent, spouse, child or other member of the employer’s immediate family.  However, not every blood relative is considered “other immediate family.”  According to the U.S. Department of Labor, the following will be considered as part of the employer’s “other immediate family”: stepchildren, foster children, stepparents, and foster parents.  Other family members, including siblings, cousins, nieces, nephews, uncles, and aunts do not count as immediate family members.  

Employed in agriculture.  Ohio law closely resembles, if not mirrors, FLSA requirements when it comes to agricultural exemptions to minimum wage and overtime requirements.  But, to qualify for the agricultural exemptions discussed above, an employer must have employees that are employed in “agriculture.”  Under the FLSA, “agriculture” has two distinct branches, primary agriculture and secondary agriculture.  Employees engaged in primary agriculture are considered to be employed in agriculture for that workweek.  Employees engaged in secondary agriculture are only considered to be employed in agriculture if the activities are performed by a farmer or on a farm in connection with the farming operations.  

What is considered primary agriculture?  Primary agriculture “includes farming in all its branches” and are those activities traditionally viewed as agricultural, including: 

  • Cultivating and tilling the soil; 
  • Dairying;    
  • Producing, cultivating, growing, and harvesting agricultural or horticultural commodities; and 
  • Raising livestock, bees, fur-bearing animals, or poultry. 

Activities that qualify as primary agriculture do not necessarily have to take place on a farm.  For example, someone employed in a hatchery that is located in an industrial complex is engaged in a primary agriculture activity (raising poultry) and is considered to be employed in agriculture.  On the other hand, even though an activity takes place on a farm, it does not necessarily mean it is considered to be a primary agriculture activity.  For example, courts have determined that employees of Dairy Farm A are not engaged in a primary agriculture activity when they process milk produced by Dairy Farm B.  

What is secondary agriculture?  Secondary agriculture includes all activities, including forestry or lumbering operations, that may not themselves be considered agricultural practices but are necessary to agriculture.  For an activity to be considered secondary agriculture it must meet two requirements: 

(1) the activity must either be performed by a farmer or on a farm; and 

(2) the activity must be incidental to or in conjunction with such farming operations. 

Secondary agriculture includes preparing an agricultural product for market, delivering agricultural products to storage, to market, or to carriers for transportation to market.  

Any activity that is performed by a farmer’s employees, is also considered to be “performed by a farmer.” Moreover, an activity is considered “incidental to or in conjunction with” farming activities if the work being performed is: 

(1) An established part of agriculture; 

(2) subordinate to the farming operations of the farm; and 

(3) not an independent business. 

Mixing it up.  After understanding what work is considered agricultural, it is important to understand the impact of an employee performing both exempt and non-exempt work.  If an employee does both exempt and non-exempt work in the same week, then the employee loses their exemption status and must be paid according to federal/Ohio minimum wage and overtime requirements.  However, if an employer can separate the employee’s exempt and non-exempt work into separate weeks, then the employer would only have to pay the employee federal/Ohio minimum wage and overtime for those weeks that the employee performed non-exempt work.  

This especially important to agricultural employers that also engage in agritourism activities.  Having a farm employee perform work related to an agritourism activity does not qualify for the agricultural exemptions under federal/Ohio law.  Agricultural employers should be careful when assigning their employees tasks.  Assigning tasks outside the realm of agriculture will subject the employer to the provisions of federal and state minimum wage and overtime laws.

Overtime.  Agricultural employers are exempt from paying their agricultural employees an overtime wage rate.  This exemption applies to all agricultural employees, not just small farm employees or immediate family members.  

Conclusion.  Determining whether your employees qualify for an agricultural exemption can be a complex issue, with multiple layers of analysis.  It is always best to ask an attorney to help clarify whether your employees are considered to be “employed in agriculture” and thus qualify for the agricultural exemptions to minimum wage and overtime laws.  Further, it is always a good idea to seek a lawyer’s counsel every so often to help make sure your operation is continuing to be compliant with labor and employment laws.  

References and Resources

29 U.S. Code Chapter 8 – Fair Labor Standardshttps://www.law.cornell.edu/uscode/text/29/chapter-8

29 U.S. Code §206 - Minimum wagehttps://www.law.cornell.edu/uscode/text/29/206

29 CFR Chapter 5 – Wage and Hour Division, Department of Labor https://www.ecfr.gov/cgi-bin/text-idx?SID=9215c26baf64464cdfbd4073e46247d3&mc=true&tpl=/ecfrbrowse/Title29/29chapterV.tpl

29 C.F.R. §§ 780 et seq. – Exemptions Applicable to Agriculturehttps://www.ecfr.gov/cgi-bin/text-idx?SID=09461535e9555139c7d6471d1b26598d&mc=true&node=pt29.3.780&rgn=div5#se29.3.780_1103

Ohio Constitution, Article II, Section 34 – Minimum Wagehttps://codes.ohio.gov/ohio-constitution/section-2.34a

Ohio Department of Commerce, 2022 Minimum Wage Poster, https://www.com.ohio.gov/documents/dico_2022MinimumWageposter.pdf

Ohio Revised Code Chapter4111 – Minimum Fair Wage Standards, https://codes.ohio.gov/ohio-revised-code/chapter-4111

U.S. Department of Labor Wage and Hour Division, Field Operations Handbook Chapter 20 – Agriculture: Related and Seasonal Exemptionshttps://www.dol.gov/sites/dolgov/files/WHD/legacy/files/FOH_Ch20.pdf

U.S. Department of Labor Wage and Hour Division, Fact Sheet #12: Agricultural Employers Under the Fair Labor Standards Act (FLSA)https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/whdfs12.pdf

Blue sturgeon swimming in river.
By: Jeffrey K. Lewis, Esq., Friday, November 12th, 2021

Did you know that white sturgeon are North America’s largest fish?  The largest white sturgeon on record was caught in 1898 and weighed approximately 1,500 pounds. Sturgeon is the common name for the species of fish that belong to the Acipenseridae family. The largest sturgeon on record was a Beluga sturgeon weighing in at 3,463 pounds and 24 feet long.  Talk about a river monster!  Swimming right along, this edition of the Ag Law Harvest brings you some intriguing election results from across the country, pandemic assistance for organic producers, and a lesson in signatures. 

Maine first state to have “right to food.”  Earlier this month, Maine voters passed the nation’s first “right to food” constitutional amendment.  The referendum asked voters if they favored an amendment to the Maine Constitution “to declare that all individuals have a natural, inherent and unalienable right to grow, raise, harvest, produce and consume the food of their own choosing their own nourishment, sustenance, bodily health and well-being.”  Supporters of the new amendment claim that the amendment will ensure the right of citizens to take back control of the food supply from large landowners and giant retailers.  Opponents claim that the new amendment is deceptively vague and is a threat to food safety and animal welfare by encouraging residents to try and raise their own products in their backyards without any knowledge or experience.  The scope and legality of Maine’s new constitutional amendment is surely to be tested and defined by the state’s courts, but until then, Maine citizens are the only ones the in the United States that can claim they have a constitutional right to food.  

New York voters approve constitutional environmental rights amendment.  New Yorkers voted on New York Proposal 2, also known as the “Environmental Rights Amendment.”  The proposal passed with overwhelming support.  The new amendment adds that “[e]ach person shall have a right to clean air and water, and a healthful environment” to the New York constitution.  New York is one of a handful of states to have enacted a “green amendment” in its state constitution.  Proponents of the amendment argue that such an amendment is long overdue while opponents argue that the amendment is too ambiguous and will do New York more harm than good. 

USDA announces pandemic support for certified organic and transitioning operations.  The U.S. Department of Agriculture (“USDA”) announced that it will be providing pandemic assistance to cover certification and education expenses to agricultural producers who are currently certified or to those seeking to become certified.  The USDA will make $20 million available through the Organic and Transitional Education and Certification Program (“OTECP”) as part of the USDA’s Pandemic Assistance for Producers initiative. OTECP funding is provided through the Coronavirus Aid Relief, and Economic Security Act (“CARES Act”).  Producers can apply for expenses paid during the 2020, 2021, and 2022 fiscal years.  For each fiscal year, OTECP will cover 25% of a certified operation’s eligible certification expenses, up to $250 per certification category.  Crop and livestock operations transitioning to organic production may be eligible for 75% of eligible expenses, up to $750 for each year.  Both certified organic operations and transitioning operations are eligible for 75% of eligible registration fees, up to $200, per year for educational events to help operations increase their knowledge of production and marketing practices.  Applications are now open and will be available until January 7, 2022.  Producers can apply through their local Farm Service Agency office.  For more information on OTECP visit https://www.farmers.gov/pandemic-assistance/otecp.    

A signature case.  In 2018 Margaret Byars died intestate survived by her 5 children.  After Byars’s death, one her sons, Keith, revealed that Margaret had allegedly executed a quitclaim deed in 2017 giving her Dayton home to Keith.  The other siblings brought this lawsuit claiming that the deed was invalid and unenforceable because the facts surrounding the execution of the deed seemed a little odd.  In 2017, Margaret was diagnosed with breast cancer and moved into a nursing facility.  Shortly after entering the nursing home, Sophia Johnson, a family friend and the notary on the deed, showed up to notarize the quitclaim deed.  Trial testimony revealed that the quitclaim deed was prepared and executed by a third party.  Margaret did not physically sign the deed herself.  In fact, the trial court noted that the signature looked like the handwriting of the person that prepared the deed and that no one saw Margaret authorize another to sign the deed for her.  Sophia testified that when she showed up to notarize the deed, the deed was already completed and signed.  Sophia also testified that Margaret seemed to intend to transfer the house to Keith and understood the nature and consequences of the deed.  After hearing all the testimony, the trial court concluded that the deed was enforceable, and the house belonged to Keith.  However, on appeal, the Second District Court of Appeals found the deed to be invalid.  The Second District stated that in Ohio a grantor need not actually sign a deed in order to be valid, however, the court concluded that the “signature requirement may be satisfied by another affixing a grantor’s signature on a deed so long as the evidence shows that the grantor comprehend the deed, wanted its execution, and authorized the other to sign it.”  The court concluded that the evidence showed that Margaret comprehended the deed and perhaps even wanted its execution.  But the evidence did not show that Margaret authorized anyone to sign the deed for her.  Because it could not be established that Margaret authorized the preparer or anyone else to sign the deed for her, the Second District court held that that deed was invalid under Ohio law.  This case demonstrates the importance of attorneys and the work they do to make sure all asset transfers and estate planning documents are in compliance with the law to help avoid unnecessary lawsuits and prevent any unintended outcomes.

Hippopotamus in water.
By: Jeffrey K. Lewis, Esq., Friday, October 29th, 2021

Did you know that Hippopotamuses cannot swim?  It’s true.  When hippos submerge themselves underwater, they don’t swim back up to the surface, instead they walk along the bottom until they reach shallow water.  That is unless the hippo decides to chase you out of its territory, then it will gladly run, jump, and charge right at you. 

Like the hippo, this week’s Ag Law Harvest is a little territorial.  We bring you recent Ohio court decisions, a federal order allowing Colombian hippos to take the testimony of Ohio residents, and the Ohio Department of Agriculture’s directives as it ramps up its fight against Ohio’s newest pest.

Well, well, well.  A recent Ohio case demonstrated the complex issues a landowner can run into when dealing with an oil and gas lease.  The Plaintiff in this case owns land in Hebron, Ohio and brought suit against his neighbors and the Ohio Department of Taxation claiming that he was not the owner of a gas well located on his property or that he was responsible for paying taxes and maintaining the well under Ohio law.  The Hebron, Ohio property at issue in this case passed through many hands before becoming the property of the Plaintiff.  One of the prior owners was a man named William Taggart (“Taggart”).  As mentioned earlier, the property also has a gas well which was subject to an oil and gas lease.  The oil and gas lease passed to multiple parties and ended up with Taggart while he owned the Hebron property.  After having both the property and the oil and gas lease, Taggart deeded the property to Plaintiff’s parents which eventually passed onto Plaintiff.  Plaintiff argued that he is not the rightful owner of the well because the last person that was assigned the oil and gas lease was Taggart, making him the owner of the well.  The Fifth District Court of Appeals disagreed.  The court found that Plaintiff’s parents registered as owners of the well under Ohio Revised Code § 1509.31 which requires a person to register a well before they can operate it.  Further, the court determined that when the oil and gas lease was assigned to Taggart the rights of the landowner and the lessee merged, essentially making Taggart the only individual with any property interest in the well.  Relying on § 1509.31, the court found that when the entire interest of an oil and gas lease is assigned to the landowner, the landowner then becomes responsible for compliance with Chapter 1509 of the Ohio Revised Code.   Therefore, when the property passed to Plaintiff’s parents, they became the owners of the well and were responsible for making sure the well was in compliance with Chapter 1509.  Because this responsibility passed onto Plaintiff, the court found Plaintiff to be liable for the taxes and ensuring that the well is compliant with Ohio law.  The court also denied Plaintiff’s attempt to argue that Taggart was the responsible party because the oil and gas lease was still in effect due to the fact that Plaintiff’s neighbors use the gas well for domestic purposes.  The court found that the oil and gas lease had expired by its own terms, pursuant to the habendum clause contained within the lease.  A habendum clause essentially defines the property interests and rights that a lessee has.  The specific habendum clause in this case stated that the lease would terminate either within three years or when the well no longer produced oil and gas for commercial purposes.  The lease at issue was well beyond the three-year term and, as the court found, the lease expired under Taggart because the well no longer produced oil or gas for commercial purposes.  The use of the well for domestic purposes did not matter.  The Fifth District ultimately held that because Plaintiff could not produce any evidence to show that another party had an interest in the well, Plaintiff is ultimately responsible for the well.   

Amending a contract doesn’t always erase the past.  Two companies (“Plaintiffs”) recently filed suit against a former managing member (“Defendant”) for allegedly using business funds and assets for personal use during his time as managing member.  The primary issue in this case was whether or not an arbitration clause in the original operating agreement is enforceable after the operating agreement was amended to remove the arbitration clause.  Defendant’s alleged misconduct occurred while the original operating agreement was in effect.  The original operating agreement would require the parties to settle any disputes through the arbitration process and not through the court system.  However, shortly before filing suit, the original operating agreement was amended to remove the arbitration provision.  Plaintiffs filed suit against the Defendant arguing that the arbitration provision no longer applied because the operating agreement had been amended.  Defendant, however, argued that his alleged misconduct occurred while the original operating agreement was in effect and that the amended operating agreement could not apply retroactively forcing him to settle the dispute in a court rather than through arbitration.  The trial court, however, sided with the Plaintiffs and allowed the case to move forward.  Defendant appealed the trial court’s decision and the Ninth District Court of Appeals agreed with him.  The District Court found that the amended operating agreement did not expressly state any intention for the terms and conditions of the amended operating agreement to apply retroactively.  Further, the court held that Ohio law favors enforcing arbitration provisions within contracts and any doubts as to whether an arbitration clause applies should be resolved in favor of enforcing the arbitration clause.  The Ninth District reversed the trial court and found that the dispute of Defendant’s alleged misconduct should be resolved through arbitration.  

Animal advocates claim victory in pursuit of recognizing animals as legal persons.  A recent order issued by a federal district court in Ohio allows an attorney for Colombian Hippopotamuses to take the testimony of two expert witnesses residing in Ohio.  According to U.S. law, a witness may be compelled to give testimony in a foreign lawsuit if an “interested person” applies to a U.S. court asking that the testimony be taken.  The Animal Legal Defense Fund (“ALDF”) applied to the federal court on behalf of the plaintiffs, roughly 100 hippopotamuses, from a lawsuit currently pending in Colombia.  According to the ALDF, the lawsuit seeks to prevent the Colombian government from killing the hippos.  The interesting thing about this case is that hippos are not native to Colombia and were illegally imported into the country by drug kingpin Pablo Escobar.  After Escobar’s death the hippos escaped his property and relocated to Colombia’s Magdalena River and have reproduced at a rate that some say is unsustainable.  In Colombia, animals are able to sue to protect their rights and because the plaintiffs in the Colombian lawsuit are the hippos themselves, the ALDF argued that the hippos qualify as an “interested person” under U.S. law.  After applying for the authorization, the federal court signed off on ALDF’s application and issued an order authorizing the attorney for the hippos to issue subpoenas for the testimony of the Ohio experts.  After the federal court’s order, the ALDF issued a press release titled “Animals Recognized as Legal Persons for the First Time in U.S. Court.”  The ALDF claims the federal court ruling is a “critical milestone in the broader animal status fight to recognize that animals have enforceable rights.”  However, critics of ALDF’s assertions point out that ALDF’s claims are a bit embellished.  According to critics, the order is a result of an ex parte application to the court, meaning only one side petitioned the court for the subpoenas and the other side was not present to argue against the subpoenas.  Further, critics claim that all the federal court did was sign an order allowing the attorney for the hippos to take expert testimony, the court did not hold that hippos are “legal persons” under the law.  

Ohio Department of Agriculture announces quarantine to combat the spread of the Spotted Lanternfly.  According to the Ohio Department of Agriculture (“ODA”) the Spotted Lanternfly (“SLF”) has taken hold in Jefferson and Cuyahoga counties.  The ODA announced that the SLF is now designated as a destructive plant pest under Ohio law and that the ODA was issuing quarantine procedures and restricting the movement of certain items from infested counties into non-infested areas of Ohio.  The ODA warns that the SLF can travel across county lines in items like tree branches, nursery stock, firewood, logs, and other outdoor items.  The ODA has created a checklist of things to look for before traveling within or out of infested counties.   Nurseries, arborists, loggers, and other businesses within those infested counties should contact the ODA to see what their obligations and rights are under the ODA's new quarantine instructions.  Under Ohio law, those individuals or businesses that fail to follow the ODA’s quarantine instructions could be found guilty of a misdemeanor of the third degree on their first offense and a misdemeanor of the second degree for each subsequent offense.  For more information visit the ODA’s website about the SLF.

By: Barry Ward, Friday, October 22nd, 2021

Farmland prices have strengthened in recent months and there are a number of key fundamentals that will likely continue to support land values in the near term. High crop prices and margins along with last year’s COVID-19 related government payments and continued low interest rates have all contributed to stronger land markets. Higher production costs and recent minor decreases in crop prices may decrease profit margins this next year and take some strength out of the market but farmland will likely continue to see increases in value through the end of this year and into the next year. Similar factors have impacted cash rental markets in Ohio and will likely continue to pressure rental rates higher in the near term.

Recent data from the United States Department of Agriculture National Ag Statistics Service (NASS) August Land Values 2021 Summary shows Ohio Farm Real Estate increasing 3.9% from 2020 to an average of $6,600 per acre in 2021. Ohio Cropland (bare cropland) showed an increase of 5.3% from 2020 to 2021. Average Cropland value is $6,800 per acre in 2021 according to this survey. Pastureland value in Ohio increased 2.1% to $3,440 per acre in 2021. Average cash rents in Ohio increased 2.6% in 2021 to $160 per acre according to this survey. The National Ag Statistics Service (NASS) also summarizes average cash rental rates by county available through Ohio NASS: www.nass.usda.gov/Statistics_by_State/Ohio/Publications/County_Estimates/2021/OH_2021_cashrent_CE.pdf

Each year, Ohio State University Extension (The Ohio State University College of Food, Agricultural, and Environmental Sciences) conducts an Ohio Cropland Values and Cash Rents Survey. The Ohio Cropland Values and Cash Rents study was conducted from January through April in 2021. The opinion-based study surveyed professionals with a knowledge of Ohio’s cropland values and rental rates. Professionals surveyed were rural appraisers, agricultural lenders, professional farm managers, ag business professionals, OSU Extension educators, farmers, landowners, and Farm Service Agency personnel.

Ohio cropland varies significantly in its production capabilities and, consequently, cropland values and cash rents vary widely throughout the state. Generally, western Ohio cropland values and cash rents differ from much of southern and eastern Ohio cropland values and cash rents. The primary factors affecting these values and rents are land productivity and potential crop return, and the variability of those crop returns. Soils, fertility, and drainage/irrigation capabilities are primary factors that most influence land productivity, crop return and variability of those crop returns.

Other factors impacting land values and cash rents may include field size and shape, field accessibility, market access, local market prices, field perimeter characteristics and potential for wildlife damage, buildings and grain storage, previous tillage system and crops, tolerant/resistant weed populations, USDA Program Yields, population density, and competition for cropland in a region. Factors specific to cash rental rates may include services provided by the operator and specific conditions of the lease.

According to the Western Ohio Cropland Values and Cash Rents Survey, cropland values in western Ohio are expected to increase in 2021 by 3.8 to 5.3 percent from 2020 to 2021 depending on the region and land class. Cash rents are expected to increase from 3.6 to 3.9 percent depending on the region and land class. For the complete survey research summary go to: https://farmoffice.osu.edu/farm-management-tools/farm-management-publications/cash-rents

This survey and the results are reflective of the thoughts of survey participants in early 2021. Recent farmland sales would lead us to believe that farmland value has likely increased more than the 3.8 to 5.3 percent that the summary indicates for 2021. Continued high crop prices along with relatively strong predicted yields throughout much of Ohio have lent more strength to farmland markets in Ohio.

Others survey results in the eastern Corn Belt may be useful in gauging the magnitude of Ohio farmland value change thus far in 2021. The Federal Reserve Bank of Chicago (7th Fed District) surveys ag lenders in their districts each quarter. (The 7th Fed District includes parts of Michigan, Indiana, Illinois, Wisconsin and all of Iowa.) Their survey in July showed the value of good farmland in their district had increased by 14 percent from July 1, 2020 to July 1, 2021. The mid-year survey conducted by the Illinois Society of Professional Farm Managers and Rural Appraisers of their members revealed an increase of 20% in farmland values from the beginning of 2021. While Ohio is not Illinois nor does Ohio sit in the 7th Fed District, these surveys may give some guidance on the level of change in farmland values in Ohio in 2021.

Posted In: Business and Financial, Crop Issues, Property
Tags:
Comments: 0
By: Barry Ward, Friday, October 01st, 2021

Barry Ward & Julie Strawser, OSU Income Tax Schools

 

Dealing with the tax provisions of the COVID-related legislation for both individuals and businesses are among the topics to be discussed during the upcoming Tax School workshop series offered throughout Ohio in November and December.

The annual series is designed to help tax preparers learn about federal tax law changes and updates for this year as well as learn more about issues they may encounter when filing individual and small business 2021 tax returns.

 

OSU Income Tax Schools are intermediate-level courses that focus on interpreting tax regulations and changes in tax law to help tax preparers, accountants, financial planners and attorneys advise their clients. The schools offer continuing education credit for certified public accountants, enrolled agents, attorneys, annual filing season preparers and certified financial planners.

 

Attendees also receive a class workbook that alone is an extremely valuable reference as it offers over 600 pages of material including helpful tables and examples that will be valuable to practitioners. Summaries of the chapters in this year’s workbook can be viewed at this site:

https://farmoffice.osu.edu/tax/2021-tax-school-chapters

A sample chapter from a past workbook can be found at:

https://taxworkbook.com/about-the-tax-workbook/

 

This year, OSU Income Tax Schools will offer both in-person schools and an online virtual school presented over the course of four afternoons.

 

In-person schools:

 

November 1-2, Presidential Banquet Center, Kettering/Dayton

November 3-4, Ole Zim’s Wagon Shed, Gibsonburg/Fremont

November 17-18, Ashland University John C. Meyer Convocation Center, Ashland

November 22-23, Christopher Conference Center, Chillicothe

November 29-30, Zane State/Ohio University Zanesville Campus, Zanesville

December 2-3, Nationwide & Ohio Farm Bureau 4-H Center, OSU Campus, Columbus

December 6-7, Hartville Kitchen, Hartville

 

Virtual On-Line School presented via Zoom:

November 8, 12, 15 & 19, 12:30 – 4:45 p.m.

 

Register two weeks prior to the school date and receive the two-day tax school early-bird registration fee of $400.  This includes all materials, lunches and refreshments. The deadline to enroll is 10 business days prior to the date of each school. After the school deadline, the fee increases to $450.

 

Additionally, the 2022 RIA Federal Tax Handbook is available to purchase by participants for a discounted fee of $50 each. Registration information and the online registration portal can be found online at:

http://go.osu.edu/2021tax

 

In addition to the tax schools, the program offers a separate, two-hour ethics webinar that will broadcast Wednesday, Dec. 15 at 1 p.m. The webinar is $25 for school attendees and $50 for non-attendees and is approved by the IRS and the Ohio Accountancy Board for continuing education credit.

 

A webinar on Ag Tax Issues will be held Monday, Dec. 13 from 8:45 a.m. to 3:20 p.m.

If you are a tax practitioner that represents farmers or rural landowners or are a farmer or farmland owner that prepares your own taxes, this five-hour webinar is for you. It will focus on key topics and new legislation related specifically to those income tax returns.

 

Registration, which includes the Ag Tax Issues workbook, is $150 if registered at least two weeks prior to the webinar. After November 29, registration is $200. Register by mail or on-line at https://go.osu.edu/agissues2021.

 

Participants may contact Ward at 614-688-3959, ward.8@osu.edu or Julie Strawser 614-292-2433, strawser.35@osu.edu for more information.

Posted In: Business and Financial, Legal Education, Tax
Tags:
Comments: 0
By: Barry Ward, Tuesday, September 28th, 2021

Each year, preliminary crop enterprise budgets are unveiled at the Farm Science Review which reveals our best estimates for costs and returns for the main row crops in Ohio for the upcoming year. With continued high crop prices projected for 2022 there is some optimism, however, higher costs will likely decrease profit margins to levels lower than 2021 margins.

Production costs for Ohio field crops are forecast to be higher compared to last year with higher fertilizer, seed, chemical, fuel, machinery and repair costs leading the way.

Variable costs for corn in Ohio for 2022 are projected to range from $477 to $583 per acre depending on land productivity. Variable costs for 2022 Ohio soybeans are projected to range from $266 to $302 per acre. Wheat variable expenses for 2022 are projected to range from $213 to $262 per acre. These are increases over last year of 19%, 18%, and 25% for corn, soybeans and wheat, respectively.

If the current grain prices and costs endure through next year, profit margins will likely be positive although higher costs may create losses for some producers. Grain prices currently used as assumptions in the 2022 crop enterprise budgets are $4.80/bushel for corn, $12.20/bushel for soybeans and $6.90/bushel for wheat. Projected returns above variable costs (contribution margin) range from $226 to $472 per acre for corn and $288 to $529 per acre for soybeans. Projected returns above variable costs for wheat range from $191 to $344 per acre.

Return to Land is a measure calculated to assist in land rental and purchase decision making. The measure is calculated by starting with total receipts or revenue from the crop and subtracting all expenses except the land expense. Returns to Land for Ohio corn (Total receipts minus total costs except land cost) are projected to range from $54 to $283 per acre in 2022 depending on land production capabilities. Returns to land for Ohio soybeans are expected to range from $166 to $393 per acre depending on land production capabilities. Returns to land for wheat (not including straw or double-crop returns) are projected to range from $99 per acre to $242 per acre.

Total costs projected for trend line corn production in Ohio are estimated to be $919 per acre. This includes all variable costs as well as fixed costs (or overhead if you prefer) including machinery, labor, management and land costs. Fixed machinery costs of $78 per acre include depreciation and other overhead. A land charge of $207 per acre is based on data from the Western Ohio Cropland Values and Cash Rents Survey Summary. Labor and management costs combined are calculated at $82 per acre. Details of budget assumptions and numbers can be found in footnotes included in each budget.

Total costs projected for trend line soybean production in Ohio are estimated to be $619 per acre. (Fixed machinery costs: $62 per acre, land charge: $207 per acre, labor and management costs combined: $53 per acre.)

Total costs projected for trend line wheat production in Ohio are estimated to be $541 per acre. (Fixed machinery costs: $36 per acre, land charge: $207 per acre, labor and management costs combined: $48 per acre.)

Current budget analyses indicates favorable returns for soybeans compared to corn or wheat but crop price change, harvest yields and other factors through fall and into summer of next year may change this outcome. These projections are based on OSU Extension Ohio Crop Enterprise Budgets. Newly updated Enterprise Budgets for 2022 have been completed and posted to the Farm Office website: https://farmoffice.osu.edu/farm-mgt-tools/farm-budgets

In addition to projected row crop budgets for 2022, there are newly updated forage budgets posted to our Farm Office site. These include Alfalfa Hay, Alfalfa Haylage and Corn Silage. Also recently updated are two Market Beef Budgets which include Market Beef Budget (Self-Fed) and Market Beef Budget (Bunk-Fed).

 

Posted In: Business and Financial, Crop Issues
Tags:
Comments: 0

Pages

Subscribe to RSS - Business and Financial