Reforestation Tax Credit
The planting of trees is important for many reasons. Trees provide the fiber that this magazine is printed on. Trees provide lumber to build schools, businesses and homes to keep us warm. Trees provide thousands of other uses including medicines and chemicals that we use everyday. And trees provide habitat for wildlife.
In March of 1999, the Mississippi Legislature passed the Reforestation Income Tax Credit (House Bill 832) to encourage reforestation practices by non-industrial, private, timberland owners. The bill passed the House and Senate with only one dissenting vote; Governor Kirk Fordice signed the bill into law on March 29.
According to Representative Bo Eaton of Taylorsville, "The forest industry is unique in that it depends on thousands of private individual landowners in our state to provide over 75 percent of the timber to operate their manufacturing facilities. Its important that we maintain a sustainable forest resource to maintain a strong economy." Eaton was the lead author of the legislation along with 56 other representatives.
Senator Billy Thames of Mize, Chairman of the Senate Agriculture Committee, and Senator Billy Harvey of Prentiss worked, with the support of Lieutenant Governor Ronnie Musgrove, to get the bill through the Senate. According to Harvey, "A group of legislators worked closely with the Mississippi Forestry Association. This is truly landmark legislation. Mississippi is the first state to adopt such a law to help provide such as sustainable timber resource. With this, Mississippi will continue its leadership role in forestry in this country."
The Mississippi Forestry Association, an organization of timberland owners and forestry businesses, began working with the Mississippi Legislature in 1997 to explain how an increased demand for timber, combined with the ice storm damage of 1994, had caused timber harvest levels to increase.
To be eligible, the landowner must be a private individual, group or association; however, private corporations that manufacture products or provide public utility services of any type or any subsidiary of such corporations are not eligible. Eligible land includes agricultural, pasture, cutover and idle land.
Any eligible landowner who incurs costs for approved reforestation practices for eligible tree species shall be allowed a credit, in an amount equal to fifty percent (50%) of the actual costs of the approved reforestation practices or fifty percent (50%) of the average cost of approved practices as established by the Mississippi Forestry Commission, against the taxes imposed for the tax year in which the costs are incurred.
The credit shall not exceed ten thousand ($10,000.00) or the amount of income tax imposed upon the eligible owner for the taxable year reduced by the sum of all other credits allowable to the eligible owner, except credit for tax payments made by or on behalf of the eligible owner. Any unused portion of the credit may be carried forward for succeeding tax years. The maximum dollar amount of the credit that an eligible owner may utilize during his or her lifetime is ten thousand ($10,000.00) in the aggregate.
Pine and hardwood tree planting practices, including the cost of seedlings, planting by hand or machine and site preparation, are eligible practices. Mixed-stand regeneration practices to establish a mixed crop of pine and hardwood trees by planting or direct seeding, or both, including the cost of seedlings, acorns, planting, seeding and site preparation, are also eligible. Direct seeding practices to establish a crop of pine or oak trees by directly applying seed/acorns to the site, including the cost of acorns, seeding and site preparation are eligible. In addition, post-planting site preparation practices to reduce or control undesirable competition within the first growing season of an established crop of trees are eligible. Approved reforestation practices shall not include the establishment of orchards, Christmas trees or ornamental trees.
If an eligible owner receives any state or federal cost share assistance funds to defray the cost of an approved reforestation practice, the cost of the practice on the same acre or acres within the same tax year is not eligible for the credit unless the eligible owner's adjusted gross income is less than the federal earned income credit level.
To be eligible for the tax credit, an eligible owner must have a reforestation prescription or plan prepared for the eligible lands by a graduate forester of a college, school or university accredited by the Society of American Foresters or by a registered forester under the Foresters Registration Law of 1977. The forester must verify in writing that the reforestation practices were completed and that the reforestation prescription or plan was followed.
A reforestation prescription or plan is a written description of the approved reforestation practices that the eligible owner plans to use and includes a legal description and map of the area to be reforested, a list of the tree seedling or seed species to be used in the reforestation and the site preparation practices that will be utilized.
Mississippi Forestry Commission Jim Sledge states, "Landowners should contact their Commission county forester for information about public and private seedling sources."
To learn more about the Reforestation Tax Credit, contact the Mississippi Forestry Association.
Photos by Michael Kelly
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