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Programs
Blog

10 Things every Farmer should know about REAP

11/12/07 14:48

DSC_0069
A short window of opportunity.

Get more from Ross Johnson at Mid Atlantic Agri Systems


1. Applications Now Available!  Applications and guidelines are now available through the State Conservation Commission (SCC) and will be accepted on a first-come, first-served basis beginning January 2, 2008.  Keep in mind that incomplete applications will be returned for re-submittal. The SCC will not consider any applications postmarked before Dec. 26 or hand delivered prior to Jan. 2 at 8 a.m. The SCC can commit up to $10 million in tax credits for fiscal year 2007-2008 for eligible projects. Forms will be available online at www.agriculture.state.pa.us/reap or by contacting the SCC at 717-787-8821.
2. REAP Provides A Dollar for Dollar Reduction in PA income or corporate tax. Farmers can earn these tax credits after completing eligible projects or purchasing eligible equipment on or after October 23, 2007.
3. Use or Sell:  Farmers can use REAP credits to offset state taxes (for 2008 taxes or later) for up to fifteen years. Alternatively, after one year, farmers can sell tax credits to another taxpayer, typically at about a 10% discount.  Brokers can help arrange sales. However, please note that the original recipient must first use the credit to offset tax obligations for the year in which the tax credit is awarded. The balance may then be sold to a second party.
4. Farmers Throughout Pennsylvania are eligible to apply. A current conservation plan that meets state erosion control regulations is required. Concentrated animal operations must additionally have a nutrient management plan. If neither is yet completed, REAP enables farmers to recover 75% of the cost to develop these plans. Businesses that sponsor eligible farm projects can earn REAP tax credits as well.
5. Improving Animal Concentration Areas: An “animal concentration area,” or ACA, is an outdoor area on a farm where livestock congregate. To be eligible for REAP, an agricultural operation must control runoff from these areas, or the implementation of ACA improvements must be included in the application for a tax credit.
6. $150,000 Per Farm: Each eligible farm may receive up to $150,000 in credits. This is a lifetime limit that may be used all at once, or for multiple projects.  Sole proprietorships, partnerships and corporations are eligible. 
7. REAP Works With Other Programs: A farmer who receives government funds for conservation projects may be able to earn tax credits for a portion of those project costs that have been paid by the farmer.
8. Eligible Practices: Farmers can earn tax credits worth 50-75% of total project costs. The tax credit is awarded after the project is completed or equipment is purchased.  Eligible practices include: development of conservation and nutrient management plans, barnyard improvements, intensive grazing systems, manure handling and storage systems, alternative uses of manure, new and used no-till planting equipment, cropland conservation practices, and other practices.
9. Plan Ahead: Farmers should visit their local County Conservation District, Natural Resource and Conservation Service (NRCS) office, or qualified technical service provider to evaluate the status of their conservation plan and if applicable, nutrient management plan. They should also discuss the program with their tax advisor.
10. Get More Details: Visit the Chesapeake Bay Foundation website at www.cbf.org/reap, email us at REAP@cbf.org, or call our office at 717-234-5550.   The Commission also has information available online at www.agriculture.state.pa.us/reap , by phone at 717-787-8821, or by mail at SCC, 2301 N Cameron St., Harrisburg, PA  17110-9408.

Aerway,Good Soil

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REAP announces program for PA Farmer

10/12/07 06:07
Resource Enhancement and Protection Program (REAP)

REAP1

More information at Mid Atlantic Agri Systems

This is information every PA Farmer should know about and act on very shortly.
   
REAP Applications are now available - click here to download. 

Applications will be accepted by the Commission on a first-come, first-served basis beginning January 2, 2008 during the normal business hours of 8:00 am through 4:00 pm, Monday through Friday. Applications may be delivered in person, via US Postal Service, or via a private carrier. Any applications received by the Commission which are postmarked prior to December 26, 2007 will be returned. The Commission will not accept any applications delivered in person prior to January 2, 2008 at 8:00 a.m.

Upon receipt of an application, the Commission will log, date stamp and review the application for completeness. Applications which are deemed administratively incomplete will be returned to the applicant. Applicants may re-submit the application when appropriate information is available, or for other practices or equipment. Applications which are deemed administratively complete will be logged, date stamped, and reviewed in the order in which they were received.
 
BACKGROUND
 
Act 55 of 2007 created the Resource Enhancement and Protection Program (REAP).  REAP  allows farmers and businesses  to earn  tax credits in exchange for ?Best Management Practices? (BMPs) on agricultural operations  that will enhance farm production and protect natural resources.
 
The program is administered by the State Conservation Commission (Commission) and the tax credits will be granted by the Pennsylvania Department of Revenue. 
 
Eligible applicants may receive between 25% and 75% of project costs as state tax credits for up to $150,000 per agricultural operation.  The amount of tax credit available to a recipient is dependent on the type of BMP implemented.
 
Up to $10 million in credits may be issued in fiscal year 2007-2008.
 

PARTICIPATION
 
There are three ways for farmers to participate in the REAP program ? Self, Sell or Sponsor
  • Implement eligible BMPs and receive tax credits directly to reduce a state tax bill.  (Self)
  • Sell tax credits to another Pennsylvania taxpayer. (Sell)
  • Work with a sponsor that will help finance a farmer?s BMPs.  The farmer will be compensated for making improvements and the sponsor will receive the tax credit. (Sponsor)
 
GENERAL ELIGIBILITY
  • Any farmer who is subject to taxation by the Commonwealth of Pennsylvania is eligible to participate in REAP.
  • Agricultural operations must have a current :
    • conservation plan
    • an agricultural erosion and sedimentation control plan (Ag E&S plan)
    • a nutrient management plan, if required. 
  • The cost of developing and implementing these plans may be included to qualify for the tax credit. 
  • An agricultural operation with an animal concentration area must have implemented the Best Management Practices (BMPs) to abate storm water runoff, loss of sediment and nutrients,  and runoff of other pollutants from the animal concentration area, or the implementation of these BMPs must be included in the application for a tax credit.
  • An agricultural operation with uncompleted BMPs required in an Ag E&S plan and/or a nutrient management plan must first include the remaining BMPs included in these plans in the application for a tax credit.
 
USING REAP TAX CREDITS
  • Tax credits for 75% of eligible costs include the following: 
    • Nutrient Management Plan, Ag. E&S Plan and/or Conservation Plan development
    • BMPs for animal concentration areas and barnyard runoff, stream bank fencing and 50 foot forested riparian buffers.
  • Tax credits for 50% of eligible costs include:
    • operation, design and equipment to reduce existing sediment and nutrient concerns
    • stream bank fencing and 35 foot riparian buffers.
  • Eligible BMPs and equipment approved by the Commission for tax credits of 50% may include:
    • manure storage systems
    • alternative manure treatment practices
    • filter strips, grassed waterways, management intensive grazing systems
    • no-till planting equipment.
  • Tax credits for 25% of eligible costs include remediation of legacy sediments (after July 1, 2008).
  • No tax credit will be provided for a publicly funded portion of a project.
  • The tax credit is to be returned if the practice is not maintained for the life span of the practice.
  • Tax credits can only be awarded to projects completed after the effective date of the Act, which is October 23, 2007.
ELIGIBLE PROJECT COSTS
 
The following are eligible costs of a project to which a tax credit may be applied:
  • Project design, engineering, and associated planning
  • Project management costs, including constructing, document preparation and applications
  • Project construction and installation
  • Equipment, materials and other eligible project components
  • Post construction expenses
  • Interest payments on loans for project implementation for up to one year prior to the awarded of the tax credit.
  • Any of the above services provided by a Conservation District
  • A tax credit may not be applied to any portion of the project cost for which public funding was received.

GETTING READY FOR REAP
 
The State Conservation Commission intends to have REAP program guidelines available on December 1, 2007. 
 
A project will be reviewed by the Commission and a determination on eligibility made within 60 days of receipt of a complete application.
 
Applications will be reviewed on a first-come, first-served basis. 
 
The first round of tax credits will be issued no later than June 30, 2008.
 
Tax credits will be granted by the Department of Revenue within 60 days of receipt of notification of completion of the project by the Commission.
 
Some steps producers can take NOW are:
  • Determine if you are eligible for the program.  Is there a conservation plan, ag erosion and sedimentation control plan, and a nutrient management plan (if required) for the agriculture operation?  Are the plans current? 
  • Before applications become available later this year, a farmer should visit the County Conservation District, or Natural Resource and Conservation Service (NRCS) office, or qualified technical service provider to evaluate the status of these plans. 
  • The REAP law requires agricultural operations with animal concentration areas (barnyards, feedlots, exercise areas, etc) to implement BMPs necessary to abate runoff and loss of nutrients from these areas.  It also requires uncompleted BMPs as part of Ag E&S and nutrient management plans to be addressed before any new BMPs or equipment may be considered for a tax credit. Priority should be given to addressing these areas of concern first.
  • Producers may wish to contact qualified farm planners, engineering firms, or technical service providers, in addition to the County Conservation District or NRCS staff, to discuss possible plans or projects.
 
SOME REMINDERS
  • REAP differs from traditional conservation programs.  It is a tax credit where, unless the farmer works with a sponsoring business, the farmer must finance all up-front costs.  The tax credit is issued after the installation of a practice, or purchase of eligible equipment.  State or federal cost-share portions of a project are ineligible for REAP tax credits.
  • Some producers owe few, if any, state taxes.  REAP tax credits can be used for up to fifteen years, and are transferable and can be sold to other taxpayers.  Through REAP?s sponsorship program, another business could help finance a project and apply for the tax credit instead of the producer.  An accountant or other financial professional can advise farmers on the benefits of REAP for their operation.
  • REAP tax credits may also be sold, and there are individuals and corporations that wish to reduce their tax liability by purchasing tax credits.  Several brokers in Pennsylvania help arrange tax credit transfers.
 

ADDITIONAL INFORMATION:
Read the REAP law (PDF) 
Return to the State Conservation Commission Web page
 
For more information, please contact:
State Conservation Commission
2301 N. Cameron Street
Harrisburg, PA 17110-9408
Phone: 717-787-8821
Fax: 717-705-3778
 

Aerway,Good Soil

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