October 2013 Agricultural Law Update
October 7, 2013
On June 6, a new Michigan law went into effect that has implications for individuals enrolled in the Qualified Forest Program (QFP). Public Acts 42-50 were designed to encourage private forestland owners to enter the Qualified Forest Program (QFP) and actively manage their land. Benefits of the program include an exemption from local school operating taxes and/or exemptions from the uncapping of the taxable value of the property in the event of a change in ownership.
The Public Acts require people with land currently enrolled in the Qualified Forest Program to submit a new Qualified Forest School Tax Affidavit (QFSTA) before Nov. 30, 2013, if they wish to remain in the program. There is no fee for filing this affidavit.
If an owner does not submit a new affidavit before Nov. 30, 2013, they will be withdrawn from the program without penalty. The owner will not be subject to a recapture tax. The property will be placed on the tax roll at the current taxable value, as though the exemption had never been granted.
KEY CHANGES TO THE QUALIFIED FOREST PROGRAM TO CONSIDER
- The new program is managed by the Michigan Department of Agriculture and Rural Development (MDARD) instead of the Michigan Department of Natural Resources.
- The maximum acreage per property owner eligible for exemption increased from 320 acres to 640 acres.
- For property with 40 or more acres of land enrolled in QFP, only 50 percent of that acreage must be stocked in productive forest. The old program required all enrolled lands to be 80 percent stocked in productive forests.
- The new program permits structures on QFP land, while the old program did not. The structures and the land beneath those structures will not benefit from the QFP tax exemption, and will be taxed at the regular rate.
- The new QFP requires a fee to participate. The fee is equal to two mills times the taxable value of the parcel, due annually to the local taxing authority. The fee will be placed in the Private Forestland Enhancement Fund and used to operate the QFP and provide educational and technical assistance to interested and enrolled program members.
- Two affidavits must now be submitted: a School Tax Affidavit and a Taxable Value Affidavit.
- If land participating in the new QFP is later withdrawn from the program, the repayment upon release (recapture tax) will be significantly less than the previous recapture tax. Owners will be subject to a repayment upon release of up to 16 mills, depending on the mills exempted under the program, times seven years.
- Forest management has been added as a consideration under the Michigan Environmental Assurance Program (MEAP).
- Lands with more than half of the acreage devoted to a combination of agricultural use and use as qualified forest land are now eligible for the 18-mill qualified agricultural property exemption.
For more information on enrolling or transitioning into the new Qualified Forest Program, please visit:
- http://www.michigan.gov/documents/mdard/Instructions_for_New_QFP_Applicants_426797_7.pdf (We have identified that the following link is no longer active, and it has been removed.)