Business and Financial

Agritourism has experienced significant growth in recent years, offering farm operators new revenue streams.  Hopefully, the recent pandemic won't hinder the growth of agritourism entrepreneurship.  Beyond COVID-19, however, there are other legal issues agritourism operators often face, and those issues can result in litigation.  We sought to identify how frequently agritourism litigation is occurring across the U.S., and what types of legal issues end up in litigation.  Our newest report for the National Agricultural Law Center, Recent Agritourism Litigation in the United States, shares the results of our research.

We categorized the agritourism lawsuits into two major categories:  land use and personal injury.  To our surprise, we identified more land use cases than personal injury cases.  Two potential explanations for this outcome are that many states across the country now have agritourism immunity laws that limit legal liability for personal injuries on agritourism operations and that personal injury cases are likely to involve insurance policies and settlements rather than litigation.  Land use cases, on the other hand, are more prevalent and center on regulatory issues such as zoning compliance and nuisance laws. 

Most clear from our research is the need for state and local governments to carefully understand and define the meaning of “agritourism,” for both personal injury and land use reasons.  The definition becomes quite important when determining whether immunity provisions protect an activity from liability for personal injuries.   The definition is also integral to assessing whether or how an agritourism activity is subject to land use laws.  Perhaps the most important result of our research is the confirmed realization that before proceeding with any “agritourism” activity, a farmer or rancher should take care to assess how state and local laws define that activity so as to reduce the risk of ending up in litigation.

The USDA’s National Agriculture Library funded our research, which we conducted in partnership with the National Agricultural Law Center.  Readers may access the report here.

Written by Barry Ward, Leader, Production Business Management and Director, OSU Income Tax Schools

In our recent Farm Office Live webinars, we’ve discussed the paid sick leave provisions in the Families First Coronavirus Response Act.  The new law recognizes that many employees have been forced by COVID-19 to stay home rather than report to work.  In such cases, the law obligates employers to provide paid sick leave but also gives federal tax credits to employers for doing so.  Here’s a summary of how the law works.

Emergency paid sick leave provision

Employers with less than 500 employees are required to provide paid sick leave to employees who are unable to work (or telework) if they have become ill with COVID-19, have similar symptoms, or must provide care to someone with COVID-19 issues.  Employees who have to care for children due to school or day care closure are also eligible for partial paid sick leave. Employers are required to provide 100 percent of the usual pay rate to an employee if they have COVID-19 or the related symptoms, up to $511 per day. If they’re unable to work due to the need to care for an affected individual or to care for children due to school or daycare closure, the employee must be paid 2/3rds of their usual pay rate up, up to $200 per day.

The following chart summarizes the requirements.

Expanded family leave provision

A second provision, the expanded family leave provision, requires employers to provide employees with up to 12 weeks of leave for COVID-19-related needs.  This leave requirement applies to employees who are unable to work due to having to care for children whose school or daycare is closed or unavailable because of COVID-19.   The first ten days of the expanded family leave are unpaid (a deductible of sorts), although the employee can use the “emergency paid sick leave provision” or accrued sick leave to cover these days if necessary.  After the first ten days, the employee is eligible to receive 2/3rd of regular pay for the remaining ten weeks, capped at $200 per day.

Note that employers with fewer than 50 employees are eligible for an exemption where the viability of the business would be threatened.  The exemption applies to the requirements to provide leave to care for a child whose school is closed or if child care is unavailable.

Employer tax credits to fully compensate for required leave

This new law provides corresponding refundable tax credits to equal all required leave provided by an employer whether the leave was required and provided under the emergency paid sick provision or the expanded family leave provision.  The credits are refundable payroll tax credits, designed to immediately and fully reimburse employers, dollar-for-dollar, for the cost of providing the required leave to their employees.

To receive the credit, employers hold on to payroll withholding as offset. Payroll withholding that can be held as this tax credit includes withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.  If this amount isn’t enough to provide the full tax credit due the employer, the employer will have to file a return with the IRS.  More information on how to claim these credits is available at: https://www.irs.gov/newsroom/covid-19-related-tax-credits-how-to-claim-the-credits-faqs

Additional details are available on the U.S. Department of Labor’s “Families First Coronavirus Response Act: Employer Paid Leave Requirements” page, here: https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave

As you may know, Ohio State's campuses and offices are closed.  But we are all working away at home, and our virtual offices are still open for business.  Starting today, April 6th, the OSU Extension Farm Office Team will open our offices online and offer weekly live office hours from 8:00-9:30 pm EST.  We'll provide you with short updates on emerging topics and help answer your questions about the farm economy.   Each evening will start off with a quick 10-15-minute summary of select farm management topics from our experts and then we'll open it up for questions and answers from attendees on other topics of interest.  For tonight's office hours, we'll focus on the newly enacted CARES Act and how it affects agriculture.

Who's on the Farm Office Team?  Our team features OSU experts ready to help you run your farm office:

• Peggy Kirk Hall -- agricultural law
• Dianne Shoemaker -- farm business analysis and dairy production
• Ben Brown -- agricultural economics
• David Marrison -- farm management
• Barry Ward  -- agricultural economics and tax

Each office session is limited to 500 people and if you miss our office hours, we'll post recordings on farmoffice.osu.edu the following day.  Register at  https://go.osu.edu/farmofficelive.  We look forward to seeing you there!

The year is still fairly new, and 2020 has brought with it some newly-introduced legislation in the Ohio General Assembly.  That being said, in 2020 the General Assembly also continues to consider legislation first introduced in 2019.  From tax exemptions to CAUV changes, to watershed programs and local referendums on wind turbines, here is some notable ag-related legislation making its way through the state house. 

New legislation

• House Bill 400 “To authorize a nonrefundable income tax credit for the retail sale of high-ethanol blend motor fuel”

HB 400 was introduced after our last legislative update in November, so while it was first introduced in 2019, it still technically qualifies as “new” to us.  Since its introduction, the bill has been discussed in two hearings in the House Ways & Means Committee.  The bill would give owners and operators of gas stations a tax rebate of five cents per gallon for sales of ethanol.  To apply, the fuel would have to be between 15% and 85% ethanol (E15).  If passed, the tax credit would be available for four years.  The bill is meant to encourage gas station owners in Ohio to sell E15, which is much more readily available in other states.  The bill is available here.

• House Bill 485 “To remove a requirement that owners of farmland enrolled in the CAUV program must file a renewal application each year in order to remain in the program”

Introduced on January 29, 2020, HB 485 would make it easier for farmers to stay enrolled in the Current Agricultural Use Valuation (CAUV) program.  CAUV allows agricultural land to be taxed at a much lower rate than other types of land.  If HB 485 were to pass, the initial application for CAUV on land more than 10 acres would automatically renew each year but the landowner must notify the auditor if the land ceases to be devoted exclusively for agricultural use. Owners of agricultural land less than 10 acres in size, who can qualify for CAUV if gross income from the land exceeds $2,500, would have to submit documentation on the annual gross income of the land to the county auditor each year rather than filing the renewal application. The CAUV bill can be found here.

Legislation from 2019 still being considered

• House Bill 24 “Revise Humane Society law”

In November, we reported that HB 24 passed the House unanimously and was subsequently referred to the Senate Committee on Agriculture & Natural Resources.  Since that time, the committee has held two hearings on the bill. The hearings included testimony from the bill’s House sponsors, who touted how the bill would improve humane societies’ public accountability. The bill would revise procedures for humane society operations, require humane society agents to successfully complete training in order to serve, and would establish procedures for seizing and impounding animals. It would also remove humane societies’ current jurisdiction over child abuse cases and make agents subject to bribery laws. Importantly, HB 24 would allow law enforcement officers to seize and impound any animal the officer has probable cause to believe is the subject of an animal cruelty offense.  Currently, the ability to seize and impound only applies to companion animals such as dogs and cats.  You can read HB 24 here. 

• House Bill 109 “To authorize a property tax exemption for land used for commercial maple sap extraction”

HB 109 was first introduced in February of 2019, but has recently seen some action in the House Ways & Means Committee, where it was discussed in a hearing on January 28, 2020.  The bill would give owners of “maple forest land” a property tax exemption if they: (1) Drill an average of 30 taps during the tax year into at least 15 maple trees per acre; (2) use sap in commercially sold maple products; and (3) manage the land under a plan that complies with the standards of reasonable care in the protection and maintenance of forest land.  In addition, the land must be 10 contiguous acres. Maple forest land that does not meet that acreage threshold can still receive a tax exemption if the sap produces an average yearly gross income of $2,500 or more in the three preceding years, or if evidence shows that the gross income during the current tax year will be at least $2,500.  You can find the text of the proposed bill here.

• House Bill 160 “Revise alcoholic ice cream law”

Have you ever thought, “Gee, this ice cream is great, but what could make it even better?” Well this is the bill for you! At present, those wishing to sell ice cream containing alcohol in Ohio must obtain an A-5 liquor permit and can only sell the ice cream at the site of manufacture, and that site must be in an election precinct that allows for on- and off-premises consumption of alcohol.  This bill would allow the ice cream maker to sell to consumers for off-premises enjoyment and to retailers who are authorized to sell alcohol. HB 160 passed the House last year and is currently in Agriculture & Natural Resources Committee in the Senate.  Since our last legislative update, the committee has had three hearings on the bill. In the hearings, proponents testified in support of the bill, arguing that it would allow their businesses to grow and compete with out of state businesses. Senators asked questions about how the ice cream would be kept away from children, how the bill would help business, and about other states with similar laws. To read the bill, click here.

• Senate Bill 2 “Create watershed planning structure”

In 2019, SB 2 passed the Senate and moved on to the House Energy and Natural Resources Committee. If passed, this bill would do four main things. First, it would create the Statewide Watershed Planning and Management Program, which would be tasked with improving and protecting the watersheds in the state, and would be administered by the ODA director.  Under this program, the director of ODA would have to categorize watersheds in Ohio and appoint watershed planning and management coordinators in each watershed region.  The coordinators would work with soil and water conservation districts to identify water quality impairment, and to gather information on conservation practices.  Second, the bill states the General Assembly’s intent to work with agricultural, conservation, and environmental organizations and universities to create a certification program for farmers, where the farmers would use practices meant to minimize negative water quality impacts. Third, SB 2 charges ODA, with help from the Lake Erie Commission and the Ohio Soil and Water Conservation Commission, to start a watershed pilot program that would help farmers, agricultural retailers, and soil and water conservation districts in reducing phosphorus.  Finally, the bill would allow regional water and sewer districts to make loans and grants and to enter into cooperative agreements with any person or corporation, and would allow districts to offer discounted rentals or charges to people with low or moderate incomes, as well as to people who qualify for the homestead exemption.

Since SB 2 moved on to the lower chamber, the House Energy and Natural Resources Committee has held multiple hearings on the bill, and has consented to two amendments.  The first amendment would keep information about individual nutrient management plans out of the public record. Similarly, the second amendment would keep information about farmers’ agricultural operations and conservation practices out of the public record. The text of SB 2 is available here.

• Senate Bill 234 “Regards regulation of wind farms and wind turbine setbacks”

SB 234 was introduced on November 6, 2019.  Since that time, the bill was assigned to the Senate Energy & Public Utilities Committee, and three hearings have been held. The bill would give voters in the unincorporated areas of townships the power to have a referendum vote on certificates or amendments to economically significant and large wind farms issued by the Ohio Power and Siting Board. The voters could approve or reject the certificate for a new wind farm or an amendment to an existing certificate by majority vote.  The bill would also change how minimum setback distances for wind farms might be measured.  The committee hearings have included testimony from numerous proponents of the bill. SB 234 is available here.  A companion bill was also introduced in the House.  HB 401 can be found here.