Tax

By: Evin Bachelor, Wednesday, March 13th, 2019

When we are not on the road presenting, in the classroom teaching, or keeping up with the news for the blog, our team is busy working on large scale research projects for the Agricultural & Food Law Consortium.  One of our recent projects looked at how states assess farmland for property tax purposes, and we then created a compilation of every state’s laws on this topic.  Based upon the research, we found that property taxes are a fact of life for virtually all landowners in the United States, but that each state uses a “differential tax assessment” for agricultural lands.

What exactly is a differential tax assessment?  Many Ohio farmers know about and use Ohio’s special property tax assessment known as CAUV, which is short for Current Agricultural Use Valuation.  Instead of assessing property taxes on the basis of the market rate for developable land, CAUV uses a different formula that assesses the land on its value for agricultural production.  CAUV is a form of differential tax assessment.

While each state utilizes differential tax assessments for agricultural lands, they use different definitions of agriculture, different formulas, and different application processes.  Some areas of law utilize model acts that states may adopt in order to make it easier to do business across state lines.  Differential tax assessments of agricultural land do not have a model act, so each state’s language reflects the culture, norms, and conditions of the respective state at the time the state adopted or amended its differential tax assessment.

An example close to home illustrates what this means.  Under Ohio Revised Code § 5713.30(A), agricultural use means commercial animal or poultry husbandry, aquaculture, algaculture, apiculture, the commercial production of field crops, tobacco, fruits, vegetables, nursery stock, ornamental trees, and sod.  Commercial timber qualifies, but non-commercial timber only qualifies if it located on or next to land that otherwise would qualify for CAUV.  Exclusive use requires just that: the land is exclusively used for an activity listed as an agricultural use.  Lands of more than 10 acres that are exclusively devoted to agricultural uses qualify, but lands of less than 10 acres only qualify if the average yearly gross income exceeds $2,500 over the preceding three years.  That is an example of a definition of what qualifies as agriculture for the purposes of the differential tax assessment.

The differential tax assessment project compiled the approaches taken by all fifty states, and the compilations are available on the National Agricultural Law Center website HERE.  This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.

By: Evin Bachelor, Friday, December 07th, 2018

The holiday season stands out as one of the most generous times of year as people give gifts to the people they love.  What better way to get into the holiday spirit than to talk about the tax implications of your gifts?  There are three shopping weekends left until December 25th, so here are three highlights about the federal gift tax that you should know:

1. The federal gift tax is assessed on the person who gives the gift, not the person who receives the gift.

An individual who gives a gift of cash or assets with a fair market value greater than $15,000 to any one person in a given year will have to report the gift(s) using IRS Form 709 when filing taxes for that year.  These forms cannot be filed jointly, so if a married couple gives a gift that is worth more than $30,000 to any one person, both of them must file IRS Form 709 and report half of the value of the gift.

Form 709 requires a few pieces of information about the gift and who receives the gift.  It asks for things like a description of the gift, the recipient’s name and address, when it was given, and its value.  While documentation or receipts do not have to be submitted with Form 709, filers should keep records for themselves about the gift in case the IRS has questions.

The gift tax rates for 2018 range from 18 to 40 percent.  The rates depend upon how much in excess of the $15,000 exclusion the gift is valued.  For instance, a gift valued at $20,000 would have no taxes on the first $15,000, but the $5,000 over the $15,000 threshold would be subject to an 18 percent tax.  The 40 percent rate applies to gifts valued at $1,015,000, or $1,000,000 over the $15,000 exclusion.

Fortunately for the recipient, the gift does not count as income to the recipient because the gift falls under the gift tax rules instead of the income tax rules.

2. Each individual may give up to $15,000 in gifts to any person per year free of federal gift taxes.  Because this rule focuses on the individual giver, a married couple could give up to a combined $30,000 in gifts to any one person tax free.

To illustrate, if Bob and Betty Buckeye have a daughter, Bernice, both Bob and Betty can give Bernice $15,000 worth of gifts in 2018, for a total of $30,000, without having to pay taxes on the gift.  If Bernice is married to Brutus, then Bob and Betty could also give a combined $30,000 gift to Brutus; however, that money is Brutus’s.  The gift to Brutus cannot be used to hide a gift to Bernice.

Importantly, some gifts are excluded from the gift tax and do not count toward the $15,000 exclusion threshold.  These include gifts to a spouse, gifts of tuition paid directly to the college or institution, gifts of medical expenses, gifts to certain exempt organizations like charities, and gifts to certain political organizations.

However, things like forgiving a debt, contributing to a 529 education plan, making an interest-free or below market rate loan, transferring the benefits of an insurance policy, or giving up an annuity in exchange for the creation of a survivor annuity do count as gifts.  When these gifts exceed the $15,000 exclusion threshold, they are taxable.

The $15,000 threshold is new for 2018.  In 2017, it was only $14,000.  The IRS now revises the amount based upon inflation, but is expected only to do so periodically in $1,000 increments.

3. Under the new tax plan passed by Congress and signed by the President in 2017, the higher estate tax threshold has made gift giving less urgent as a tax planning strategy.

Many individuals used the gift exemption as a way to provide for the next generation while also lessening the risk or burden of federal estate taxes.  However, the 2017 tax reform doubled the value of an individual estate that is exempt from the estate tax to $11,180,000.  A couple may take advantage of that individual exemption, and, with proper planning, shield $22.4 million in assets from the federal estate tax.  Unless an estate is likely to reach the applicable threshold, gifts may not be as important of an estate planning tool solely to avoid estate tax consequences.

Long-term planners may want to keep in mind that the new estate tax exemption is set to expire at the end of 2025.  If the $11,180,000 exemption is not extended by the end of 2025, the law will revert back to what it was before the 2017 tax reform, thereby returning the estate tax exemption threshold to around $5.5 million.

Disclaimer: While the estate tax changes may have made gifts less relevant as an estate planning tool for some, this certainly does not mean that gifts should be cancelled this year.  The OSU Extension Farm Office cannot take responsibility for that.  It only means that more families can focus on giving for love, rather than taxes.

For more information on federal gift taxes, contact an accountant or attorney, or visit the Internal Revenue Service’s “Frequently Asked Questions on Gift Taxes” here.  For more general information about how taxes affect agriculture, visit the OSU Extension Farm Office Tax Law Library here.

Posted In: Tax
Tags: farm tax law, gift tax, Estate Planning
Comments: 0
By: Evin Bachelor, Wednesday, November 07th, 2018

A landowner may present evidence regarding the value and acreage of his or her land, but the Board of Tax Appeals (BTA) is free to weigh that evidence as it wishes, according to the Ohio Supreme Court.  All seven justices agreed that the BTA in the case of Johnson v. Clark County Board of Revision acted with appropriate discretion, although two justices did not sign onto the reasoning as to why the BTA acted appropriately.  The case involved a property owner’s challenge of the Clark County Auditor’s determination of Current Agricultural Use Valuation (CAUV) for property tax purposes.

Continue reading for more information about what CAUV is, how CAUV determinations and tax assessments can be appealed, what happened in the Johnson v. Clark County Board of Revision case, and the main takeaways from the Supreme Court’s decision.

What is CAUV?

CAUV permits owners of land devoted exclusively to agricultural uses to request that the county auditor assess property for tax purposes based upon the value of the land’s current agricultural use, rather than its true market value.  Since its inception, CAUV has generally provided landowners with qualifying property a lower tax bill than they otherwise would have using market value.  Ohio most recently changed the formula for CAUV in 2017.  If CAUV land is converted to a use that no longer qualifies for CAUV treatment, the land is again assessed based upon its fair market value and the landowner must pay to the county the difference between the CAUV value and the fair market value for the prior three years.  To learn more about CAUV, visit the Ohio Department of Taxation’s CAUV webpage here.

How can a CAUV determination be appealed?

First, if a landowner believes that all or part of his or her parcel qualifies for CAUV, an application must be submitted to the county auditor where the land is located.  County auditors are the “chief assessing officers of their respective counties” and have the authority, within the guidelines of the state tax commissioner, to make the initial CAUV determination under Ohio Revised Code § 5715.01(B).  Landowners should contact their county auditors about filing instructions.

Second, the procedure to appeal whether land qualifies for CAUV is different than the procedure to appeal a tax valuation assessment.  If a landowner does not agree with their county auditor’s determination as to whether or not land qualifies for CAUV, they have thirty days to file an appeal with their county court of common pleas under Ohio Revised Code § 929.02(A)(2).  Decisions of courts of common pleas can be appealed to the state district court of appeals, and those decisions can be appealed to the Ohio Supreme Court.

If a landowner does not agree with their county auditor’s valuation assessment, the landowner may file a complaint with their county Board of Revision.  The forms for these complaints are generally available at the county auditor’s office or website.  If a Board of Revision believes that the county auditor made an error in applying the CAUV statute and rules, the board has the authority to revise tax assessments.  If the landowner still does not agree with the Board of Revision’s decision, he or she may appeal to the Ohio Board of Tax Appeals within thirty days of the Board of Revision’s decision under Ohio Revised Code § 5717.01.  More information is available on the BTA’s website here.  Alternatively, under Ohio Revised Code § 5717.05, the landowner may appeal the Board of Revision’s decision to the appropriate county court of common pleas.

Decisions of the BTA can be appealed to the respective state district court of appeals where the land in question is located, and those decisions can be appealed to the Ohio Supreme Court.  However, there are certain cases in which landowners can appeal decisions of the BTA directly to the Ohio Supreme Court under Ohio Revised Code § 5717.04.  However, the types of appeals of a BTA decision eligible for direct appeal to the Ohio Supreme Court were reduced in September 2017 through House Bill 49.

What happened in Johnson v. Clark County Board of Revision?

Mr. Johnson challenged the Clark County Auditor’s 2013 tax assessment of his 154.61 acre farm.  Neither party disagreed that the land qualified for CAUV, but Mr. Johnson disagreed with how much the Clark County Auditor said the farm was worth under the CAUV formula.  For tax year 2013, the auditor assessed the property’s CAUV at $457,250.

Mr. Johnson appealed to the Clark County Board of Revision.  He testified, and also elicited testimony from an employee of the Clark County Soil and Water Conservation District and an employee of the Clark County Auditor’s office.  Further, Mr. Johnson presented photographs, official records from the tax commissioner and auditor, and a “self-prepared written statement purporting to convey [the SWCD employee’s] site-visit findings.”  The Board of Revision rejected Mr. Johnson’s claims.

Mr. Johnson then appealed to the Ohio Board of Tax Appeals.  Again, Mr. Johnson testified and produced a number of exhibits.  At this appeal, he elicited testimony from an employee of the Ohio Department of Taxation.  The BTA also rejected Mr. Johnson’s claims, finding that the Clark County Auditor had acted appropriately.  Mr. Johnson then filed an appeal to the Ohio Supreme Court in 2016.  Mr. Johnson represented himself pro se, or without an attorney.

What are the main takeaways, and why did the landowner not succeed?

First, the Ohio Supreme Court explained that a landowner challenging a Board of Revision or Auditor’s tax assessment must convince the BTA that his or her valuation assessment is correct and the one they are challenging is incorrect.  This requirement to convince the Board of Tax Appeals is known as the burden of proof.  The burden of proof determines which party must play an active role in proving his or her argument, while the opposing side will only have to present proof to counter if the board finds that the first party has carried its burden.  Here, the court said that Mr. Johnson, as the landowner challenging the assessment, had the burden to convince the BTA.  The court disagreed with Mr. Johnson’s argument that the county should have to rebut his evidence and prove the value that it assessed.

Second, even though the BTA properly said that Mr. Johnson had the burden of proof, this does not mean that the BTA should have presumed the Board of Revision’s decision to have been correct.  Instead, the BTA must independently analyze the evidence presented to it, and not simply defer to and accept the Board of Revision’s decision.  Here, the Ohio Supreme Court found that the BTA did conduct an independent assessment in confirming the Board of Revision’s determination.

Third, while an owner may present evidence as to the value of his or her land, a BTA has discretion to determine how much weight to give to that evidence.  An owner’s opinion as to the value of his or her land is not determinative, but is merely a piece of evidence that the BTA may consider.

Fourth, instead of looking at the acreage, the focus of the assessment should be on boundaries and a property’s uses within those boundaries.  The Ohio Supreme Court explained the distinction between calculating acres and delineating boundaries by using dictionary definitions, and the distinction is essentially that a bounded area is fixed in space, while acreage alone describes an area without a specific line of demarcation.  To prove that a parcel or portion of a parcel qualify for CAUV treatment, the boundaries of the qualifying land must be determined.  Acres can only be determined after the boundaries are established.  Here, Mr. Johnson did not prove the boundaries of CAUV areas on his land to the BTA’s satisfaction, and the Ohio Supreme Court said that it was within the BTA’s discretion to reject Mr. Johnson’s evidence.

The Ohio Supreme Court’s full opinion, cited as 2018-Ohio-4390, is available here.  Additional facts about the case can be found within the court’s opinion.

Posted In: Tax
Tags: agricultural tax law, farm tax law, cauv
Comments: 0
By: Peggy Kirk Hall, Thursday, December 07th, 2017

Decisions announced today by the Ohio Supreme Court will allow landowners to challenge Current Agricultural Use Valuation (CAUV) land values established by Ohio’s tax commissioner by appealing the values to the Board of Tax Appeals.

Twin rulings in cases filed by a group of owners of woodland enrolled in CAUV, Adams v. Testa, clarify that when the tax commissioner develops tables that propose CAUV values for different types of farmland, holds a public hearing on the values and adopts the final values by journal entry, the tax commissioner’s actions constitute a “final determination” that a landowner may immediately appeal to the Board of Tax Appeals. The Board of Tax Appeals had argued that the adoption of values is not a final determination and therefore is not one that a landowner may appeal to the Board.

The tax commissioner forwards the CAUV tables to the county auditors, who must use the values for a three year period. An inability to appeal the values when established by the tax commissioner would mean that a landowner must wait until individual CAUV tax values are calculated by the county auditor, who relies upon the tax commissioner’s values to calculate the county values. As a result of today’s decision, landowners may appeal the values as soon as the tax commissioner releases them.

The landowners also claimed that the process and rules for establishing the CAUV values are unreasonable and not legal. However, the Court rejected those claims.

For an excellent summary of the Adams v. Testa cases by Court News Ohio, follow this link.

By: Peggy Kirk Hall, Monday, July 03rd, 2017

Written by Chris Hogan, Law Fellow, OSU Agricultural & Resource Law Program

Governor Kasich signed HB 49 on June 30, 2017, otherwise known as Ohio’s Operating Budget. In addition to setting the budget for various agencies, HB 49 changes how farmland is valued under Ohio’s Current Agricultural Use Value program. HB 49 changes Ohio Revised Code Sec. 5715.01. The overall effect of the changes will likely be a downward trend in property tax valuation for Ohio farmers.

The budget bill prescribes the method for determining CAUV value for land devoted to agricultural use. The law requires appraisal methods to reflect and consider the following:

  • standard and modern appraisal techniques that take into consideration the productivity of the soil under normal management practices;
  • typical cropping and land use patterns;
  • the average price patterns of the crops and products produced;
  • typical production costs to determine the net income potential to be capitalized; and
  • other pertinent factors.

Under HB 49, the Tax Commissioner must annually determine and announce the capitalization rate used to compute CAUV values. The bill directs the Tax Commissioner to use standard and modern appraisal techniques in determining the land capitalization rate to be applied to the net income potential from agricultural use. In determining this yearly rate, the Commissioner must use an equity yield rate equal to the greater of the average of the total rates of return on farm equity for the last 25 years (as published by USDA), or the loan interest rate the Commissioner uses for that year to calculate the capitalization rate. The Tax Commissioner is required to assume that the holding period for agricultural land is twenty-five years for computing buildup of equity or appreciation with respect to that land.

HB 49 requires that land used in conservation programs be valued at the lowest soil productivity type. However, if land devoted to a conservation program ceases to be used for conservation purposes within three years of certification, the land will be valued at its actual soil type for all preceding years.

The Tax Commissioner must publish an annual report of CAUV values that can be sorted by county and by school district. The changes to CAUV begin in 2017, starting with counties undergoing reappraisal for the 2017 tax year. The budget bill, as signed by the Governor, is here—see page 2145 of that document for the changes to CAUV.

By: Peggy Kirk Hall, Monday, June 26th, 2017

Written by Chris Hogan, Law Fellow, OSU Agricultural & Resource Law Program

Two separate bills concerning CAUV continue to be debated in the Ohio Legislature: Senate Bill 36 and House Bill 49. Ohioans may see changes to the CAUV program, if either bill passes the Legislature. Both bills aim to address rising CAUV rates for Ohio farmers. SB 36 changes the CAUV formula, making alterations to the capitalization rate and addressing the rate used for conservation land values. SB 36 passed in the Senate and is under consideration by the House Ways and Means Committee. The other bill that would address CAUV values—HB 49, is Ohio’s bi-annual budget bill. HB 49 similarly addresses Ohio’s rising CAUV values through proposed changes to the CAUV capitalization rate.

The difference between the two bills is that the budget bill will undoubtedly pass. That being said, the budget bill’s CAUV provisions may be cut from the final version.  On the other hand, there is no guarantee that the House will pass SB 36. There are several scenarios that may occur regarding the two CAUV bills in the Ohio Legislature.

Scenario #1: HB 49 (the Budget Bill) Passes with CAUV Provisions Included

In an earlier post, we explained  HB 49’s proposed changes to the CAUV program. HB 49 proposes changes to the CAUV program similar to those proposed in the standalone CAUV bill, SB 36. Although HB 49 currently contains amendments to the CAUV program, it is subject to change.

Passing a budget bill is a long and complex process.  Budget bills must start in the Ohio House of Representatives. The main purpose of a budget bill is to set the state’s operating budget, but such a bill may also include changes to Ohio laws. After the House passes a budget bill, the bill goes to the Ohio Senate. The Senate can pass the bill as written by the House, or the Senate may amend the bill and send their amended version back to the House.

The Senate passed their amended version of HB 49 on June 21. However, the House did not agree with the amendments. Therefore, the Senate and the House will soon hold a conference committee where both houses will meet and settle the differences between the two bills. Ohio’s budget is based on a fiscal year which ends on June 30. If passed, a new budget will go into effect July 1, 2017. Ohioans may soon learn if the state’s budget bill will enact changes to the CAUV program.

Scenario #2: SB 36 Passes and Changes the CAUV Program

Ohioans will soon find out if changes to the CAUV formula will be passed as part of HB 49. However, the CAUV provisions of HB 49 could still be removed before the bill passes. If CAUV changes are not passed via the budget bill, the CAUV formula could still be altered via SB 36.

SB 36 recently passed the Ohio Senate and is currently under consideration by the Ohio House Ways and Means Committee. The bill would make changes to Ohio’s CAUV formula, including the capitalization rate calculation and the rate used for calculating the value of conservation lands. For more information on SB 36, see our earlier blog post here.

The Ohio House can consider SB 36 until the end of the legislative session. The current legislative session ends on December 31, 2018. The House Ways and Means Committee may vote on SB 36 before the end of the session, or the bill could expire if it does not leave the committee before the end of the session.

The Legislature will soon meet in a conference committee to try and reach a consensus on the budget bill. HB 49 could pass as written or in an amended form that does not include any changes to CAUV. SB 36 may pass as written or amended as well. Conversely, it is plausible that neither bill could pass.  

Read S.B. 36 as amended here.  The Legislative Service Commission’s summary of the bill is here. The most recent version of HB 49, as amended by the Senate, is here.

By: Peggy Kirk Hall, Thursday, May 11th, 2017

Ohio's Senate has settled on its solution for fixing Ohio's CAUV formula. The Senate unanimously passed S.B. 36  yesterday after the Senate Ways and Means Committee adopted two amendments to the bill.  The legislation aims to stem recent increases in property taxes for farmland enrolled in Ohio's Current Agricultural Use Valuation (CAUV) program.   The Senate's bill will ensure that the CAUV formula "sticks to valuing farmland based on agricultural production," stated the bill's sponsor, Sen. Cliff Hite (R-Findlay). 

In addition to including new factors in the CAUV formula,  making changes to the capitalization rate calculation and addressing rates used for conservation lands (explained in detail in our earlier post on S.B. 36), the bill passed by the Senate yesterday contained two new provisions:

  • A three year phase-in of the changes to the CAUV formula, which would begin the first tax year after 2016 in which a county's sexennial appraisal or triennial update occurs.  The purpose of the phase-in is to reduce the financial impact of lowered property valuations on school districts.
  • Replacement of the seven year rolling average determination of the equity yield rate with an equity yield rate that equals the 25-year average of the "total rate of return on farm equity" determined by the United States Department of Agriculture but that cannot exceed the loan interest rate used in the debt factor of the capitalization rate computation.

Last week, Ohio's House passed legislation containing different solutions for revising the CAUV program in H.B. 49 (see our summary of H.B. 49 here).  Senate leaders yesterday indicated a willingness to work with the House to resolve the differences between the two bills.  H.B. 49 is now before the Senate Finance Committee.

Read S.B. 36 as amended here.  The Legislative Service Commmission's summary of the bill is here.

Posted In: Tax
Tags: cauv, agricultural tax law, real property tax
Comments: 0
By: Peggy Kirk Hall, Thursday, April 27th, 2017

Written by Chris Hogan, Law Fellow, OSU Agricultural & Resource Law Program

Update:  The House passed H.B. 49 on May 2, 2017.

The Ohio legislature continues to consider revising the Current Agricultural Use Valuation (CAUV) law that affects taxation of agricultural land. However, the latest legislative discussions are not about Senate Bill 36, introduced by Senator Cliff Hite on February 7, 2017 (read more about that bill here).  Instead, current debate centers on a new proposal in House Bill 49, Ohio’s “budget bill.”   The House Finance Committee is currently considering that bill.

The budget bill proposal would require the equity yield rate used in the CAUV capitalization rate to equal the greater of either the 25 year average of the total rate of return on farm equity published by the USDA or the loan interest rate. The capitalization rate is used to calculate a valuation from an annual profit for an average Ohio farm, considering only agricultural factors.  The proposal would establish a holding period of 25 years for calculating equity build-up and land value appreciation in the formula.  Addressing concerns about taxation amounts on land in conservation programs, the bill also would place a ceiling on the taxable value of CAUV land used for conservation purposes by requiring the land to be valued as though it included the least productive soil.  

The proposed changes to the CAUV program would be phased in over two reassessment update cycles.  The bill would also reconcile the proposed changes with the current formula by specifying that during the first three-year cycle in each county (beginning with tax year 2017), the tax value of CAUV land would include one half of the difference between its value under the new versus the old formula.

Time may soon tell whether Ohio lawmakers will address the agricultural community’s concerns about property tax increases under the current CAUV formula and if so, whether it will prefer the House’s budget bill or the Senate’s proposal.  The budget bill is available here--see page 652 of that document for the suggested changes to CAUV.  The Senate’s bill, which has received four hearings before the Senate Ways and Means Committee but still remains in committee, is available here.

Posted In: Property, Tax
Tags: cauv, current agricultural use valuation
Comments: 0
By: Peggy Kirk Hall, Wednesday, February 08th, 2017

Written by:  Chris Hogan, Law Fellow, OSU Agricultural & Resource Law Program

The Ohio Legislature is once again considering a bill regarding Ohio’s current agricultural use valuation (CAUV) program. CAUV permits land to be valued at its agricultural value rather than the land’s market or “highest and best use” value. Senator Cliff Hite (R-Findlay) introduced SB 36 on February 7, 2017. The bill would alter the capitalization rate used to calculate agricultural land value and the valuation of land used for conservation practices or programs. The bill has yet to be assigned to a committee.  

The content of SB 36 closely mirrors the language of a bill meant to address CAUV from the last legislative session: SB 246. Introduced during the 131st General Assembly, SB 246 failed to pass into law. SB 246 proposed alterations to the CAUV formula which are identical to those proposed by the current bill: SB 36. According to the Ohio Legislative Service Commission’s report on SB 246, the bill would have proposed changes that would have led to a “downward effect on the taxable value of CAUV farmland.” The likely effect for Ohio farmers enrolled in CAUV would have been a lower tax bill.

Due to the similarity between the two bills, the potential impacts of SB 36 on the CAUV program will likely be comparable to those of the previous bill. The proposed adjustment of the capitalization rate is likely to reduce the tax bill for farmers enrolled in CAUV. More specifically, the bill proposes several changes to the CAUV formula:

  • States additional factors to include in the rules that prescribe CAUV calculation methods. Currently, the rules must consider the productivity of the soil under normal management practices, the average price patterns of the crops and products produced to determine the income potential to be capitalized and the market value of the land for agricultural use. The proposed legislation adds two new factors: typical cropping and land use patterns and typical production costs.
  • Clarifies that when determining the capitalization rate used in the CAUV formula, the tax commissioner cannot use a method that includes the buildup of equity or appreciation.
  • Requires the tax commissioner to add a tax additur to the overall capitalization rate, and that the sum of the capitalization rate and tax additur “shall represent as nearly as possible the rate of return a prudent investor would expect from an average or typical farm in this state considering only agricultural factors.”
  • Requires the commissioner to annually determine the overall capitalization rate, tax additur, agricultural land capitalization rate and the individual components used in computing those amounts and to publish the amounts with the annual publication of the per-acre agricultural use values for each soil type.

To remove disincentives for landowners who engage in conservation practices yet pay CAUV taxes at the same rate as if the land was in production, the proposed legislation:

  • Requires that the land in conservation practices or devoted to a land retirement or conservation program as of the first day of a tax year be valued at the lowest valued of all soil types listed in the tax commissioner’s annual publication of per-acre agricultural use values for each soil type in the state.
  • Provides for recalculation of the CAUV rate if the land ceases to be used for conservation within three years of its original certification for the reduced rate, and requires the auditor to levy a charge for the difference on the landowner who ceased the conservation practice or participation in the conservation program.

To read SB 36, visit this page. For more information on previous CAUV bills, see our previous blog post

By: Peggy Kirk Hall, Wednesday, January 11th, 2017

Written by:  Ellen Essman and Chris Hogan, Law Fellows, OSU Agricultural & Resource Law Program

Part Two

Below is the second of our two-part series regarding bills related to agriculture that failed to pass during Ohio’s 2015-2016 legislative session.

Animal Welfare

Requirements for Humane Society Agents and House Bill 45

House Bill 45 was introduced February 10, 2015 and would have amended existing law to impose additional requirements upon those people hoping to be appointed as humane society agents.  A number of changes and additions would have been implemented through the passage of HB 45.  The bulk of the proposed legislation concerned training for humane society agents and filing evidence of completing that training with the county recorder.  HB 45 would have required county recorders to record “[p]roof of successful completion of training by humane society agents,” as well as “notices of revocation of agents’ appointment” in the official records (emphasis added).  According to the bill, proof of completion of training would have had to been signed by the CEO of the organization that provided training, the chief officer of the county humane society, and either the mayor or probate judge in the county.

House Bill 45 was referred to the Local Government Committee on February 11, 2015.  No further action was taken, rendering the proposed legislation dead when the 131st General Assembly ended.  

To read HB 45, visit this page. The Ohio Legislative Service Commission’s analysis of HB 45 is available here.

Tethering Animals and House Bill 94

House Bill 94 was introduced March 2, 2015 and would have enacted language that would have made it illegal to negligently tether an animal outside in certain situations. The bill would have imposed time limits on tethering and a prohibition on tethering animals in certain weather conditions.  Furthermore, a prohibition on tethering would have been imposed if the tethers were unsafe, under a certain length, allowed the animal to touch fences or cross property lines, or were inappropriate for the animal’s size.  HB 94 also would have prohibited tethering if the surrounding area was unsanitary, or if the owner of the premises was not present.  Finally, the bill would have amended the current law to include punishment for violating the proposed tethering language.  The bill, however, was referred to the House Agriculture and Rural Development Committee and afterwards, no action was taken on it. 

To read HB 94, visit this page. The Ohio Legislative Service Commission’s analysis of HB 94 is available here.

Animal Abusers and House Bill 177

 House Bill 177 was introduced on April 28, 2015.  HB 177 would have required people who either were “convicted of or pleaded guilty to” a number of animal abuse violations to submit certain information, along with a fee, to the Attorney General within 30 days of “being convicted or pleading guilty.” HB 177 also tasked the Attorney General with creating and keeping a registry of animal abuse violators.

Law enforcement officers, humane society agents, and dog wardens would have been responsible for notifying the Attorney General of animal abuse violations. Animal shelters would have been prohibited from allowing a person on the registry from adopting a dog, cat, or any animal kept in a home. 

The bill was referred to the Agriculture and Rural Development Committee on May 5, 2015, where no further action was taken.

To read HB 177, visit this page.

Sale of Dogs and House Bill 573

House Bill 573 was introduced on May 17, 2016.  This bill focused on the sale of dogs both from pet stores and from other entities.   The bill would have added or changed a number of definitions in the Ohio Revised Code.  Most notably, the law would have made it illegal for a pet store to “negligently…offer for sale” or otherwise “transfer” a dog unless it came from an animal rescue, an animal shelter, a humane society, a dog retailer, or a qualified breeder, all of which were defined elsewhere in the bill. 

Additionally, according to HB 573, both dog retailers and pet stores would have been forbidden from selling or otherwise transferring a dog under a number of conditions.  Under the bill, they could not have sold dogs less than eight weeks old, dogs that had not been inspected by a veterinarian, and dogs without a microchip, among other conditions. However, none of these requirements would have been applicable to a dog sold or otherwise “transferred from the premises where the dog was bred and reared.” Finally, the bill included language stating that it would preempt local laws regulating the sale of dogs.  House Bill 573 was referred to the Finance Committee on May 23, 2016 and no further action was taken. 

To read HB 573, visit this page. The Ohio Legislative Service Commission’s analysis of HB 573 is available here.

Natural Resources

Invasive Species and House Bill 396

House Bill 396 was introduced on November 16, 2015.  This bill dealt with restricting and prohibiting certain species in Ohio.  HB 396 would have added a number of definitions to the Ohio Revised Code, including a lengthy list of “prohibited species.”  Species of birds, crayfish, fish, insects, and mollusks were included in the list.  Additionally, “restricted species” was defined as including the quagga mussel, the zebra mussel, and their eggs.  In addition, HB 396 would have given the Chief of the Division of Wildlife, with advice from Ohio Director of Agriculture, the power to designate other restricted and prohibited species subject to a number of considerations.  One of these considerations would have been whether or not the species could cause severe harm to agricultural resources. The bill would have made it illegal to possess, introduce, sell, or offer to sell restricted and prohibited species.

The bill was referred to the Agricultural and Rural Development Committee on January 20, 2016 and ultimately did not leave the Committee.

To read HB 396, visit this page. The Ohio Legislative Service Commission’s analysis of HB 396 is available here.

Deer Rehabilitation and House Bill 267

House Bill 267 was introduced on June 22, 2015 and would have changed the Ohio Revised Code to allow licenses to run deer sanctuaries, permits to rehabilitate deer, and training for law enforcement.  During the training, law enforcement officers were supposed to learn how to determine whether they needed to humanely euthanize injured deer or transfer them to someone permitted to rehabilitate the deer.

The bill was referred to the House Committee on Energy and Natural Resources on October 1, 2015, and was ultimately stranded there. 

To read HB 267, visit this page. The Ohio Legislative Service Commission’s analysis of HB 267 is available here.

Labeling Nursery Stock and House Bill 566

 House Bill 566 was introduced on May 12, 2016 and would have made it illegal for a person to “recklessly label or advertise nursery stock as beneficial to pollinators” if the nursery stock had been “treated with a systemic insecticide.”  It would also have been illegal for a person to “recklessly label” stock as beneficial if the stock included the U.S. EPA warnings of “pollinator protection box[es]” and “pollinator, bee, or honey bee precautionary statement[s] in the environmental hazard section of an insecticide product label” on its packaging. 

The bill was referred to the Agriculture and Rural Development Committee on November 11, 2016 and never made it any further.

To read HB 566, visit this page. The Ohio Legislative Service Commission’s analysis of HB 566 is available here.

Taxation

Adjusting Current Agricultural Use Value formulas: Senate Bill 246 and House Bill 398

During the 131st General Assembly, the Senate considered Senate Bill 246. SB 246 addressed how current agricultural use value, otherwise known as CAUV, is calculated. CAUV permits land to be valued at its agricultural value rather than the land’s market or “highest and best use” value. SB 246 was a companion bill. That means that a version of the bill was introduced in both the Ohio House and the Ohio Senate. The companion house bill to SB 246 was House Bill 398.

Both bills were intended to alter the current formula used to calculate CAUV values across Ohio. According to the Ohio Legislative Service Commission, the changes proposed by the bill would “have a uniformly downward effect on the taxable value of CAUV farmland.” Thus, the likely effect would have been a lower tax bill for farmers who are taxed on a CAUV basis.

The Senate referred its bill, SB 246, to the Senate Ways and Means Committee on December 9, 2015 and HB 398 was referred to the House Government Accountability and Oversight Committee on January 20, 2016. Neither committee acted on its bill. Therefore, neither bill was passed into law during the 131st General Assembly.

To read SB 246, visit this page. The Ohio Legislative Service Commission’s analysis of SB 246 is available here. To read HB 398, visit this page. The Ohio Legislative Service Commission’s analysis of HB 398 is available here.

Nonrefundable Tax Credits for Rural Businesses and Senate Bill 209

The 131st General Assembly considered a nonrefundable tax credit for insurance companies that invest in certain rural business growth funds. According to the Ohio Legislative Service Commission, qualifying rural business growth funds include special purpose rural businesses that contribute capital to certain kinds of businesses with substantial operations in rural areas of Ohio.

SB 209 passed in the Ohio Senate. But, the bill did not pass the Ohio House. Therefore, the bill was not passed into law during the 131st General Assembly.

To read SB 209, visit this page. The Ohio Legislative Service Commission’s analysis of SB 209 is available here.

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