Washington Update: Dec. 21, 2007
The latest legislative news updates from Washington, D.C., that impact Resort and RLI.
Farm Bill Passes Senate, Conference Committee Set for Early 2008
Energy Bill Passes Congress, President Makes It the Law
EIA Projects Renewable Energy Use Doubling by 2030
NAR Shares Perspective on Wetlands Bill With the Corps of Engineers
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Farm Bill Passes Senate, Conference Committee Set for Early 2008
The Senate passed the Endangered Species Recovery Act (ESRA) as part of its 2007 Farm Bill on Dec. 14, 2007. The inclusion of ESRA, which provides tax credits for landowners who voluntarily undertake measures to further the recovery of threatened or endangered species, is a significant step forward for conservation efforts on private lands. The bill will now move to conference with the House-passed farm bill, which does not include ESRA. We will continue to keep you up to date as the process moves forward.
The specific components of this portion of the Senate bill include:
Conservation Reserve Program Tax Credits
Currently, participants in the Department of Agriculture’s Conservation Reserve Program (CRP) receive cash payments. The proposal will allow a participant in CRP the option to choose between the regular cash payment and a tax credit. The tax credit will be equal to 100% of the value of the cash payment the participant would have otherwise received and the credit will be excludable from both income and self-employment taxes. Cost is $3.771 billion over 10 years.
Wetlands Reserve Program and Working Grasslands Protection Program Tax Credits
Currently, participants in the Wetlands Reserve Program and Working Grasslands Protection Program receive cash payments for easements they sell to the government. The proposal will allow a participant in these programs the option to choose between the cash payment for the easement or a tax credit. A tax credit will be equal to the value of the payment they would have received after taxes were paid on the payment.
Tax Treatment of Conservation Reserve Program Payments
Farmers enrolling their land in CRP receive payment for refraining from farming their property and for engaging in certain conservation practices mandated by the Department of Agriculture. This proposal provides that CRP payments to retired or disabled individuals are to be treated as rental payments for tax purposes and are therefore excluded from self-employment taxes, and will be retroactive for all open tax years.
Rural Heritage Conservation Extension
Baucus would permanently extend the enhanced tax incentive for conservation easements included in last year’s Pension Protection Act. The provision allows all taxpayers to deduct up to 50% of their adjusted gross income (AGI) for donations of conservation easements and carry forward the deduction up to 15 years. A bonus allows ranchers and farmers to deduct up to 100% of their AGI for donations of conservation easements.
Endangered Species Recovery Act
This proposal establishes two new tax credits for taxpayers who take voluntary measures to aid in the recovery of species that are either listed as threatened or endangered under the Endangered Species Act (ESA) or deemed by the Secretary of Interior or Commerce to be warranted for protection under the ESA. It also establishes a tax deduction for the cost of actions to implement recovery plans under the ESA, and an exclusion from income tax obligations for payments received under various cost-share programs.
Forest Bonds
This proposal establishes a national program allowing the issuance of $1.5 billion in tax-exempt timber conservation bonds. The bonds must be issued by a non-profit organization whose holdings consist primarily of forests and forest lands and whose board of directors includes specified representation of public officials and conservation organizations. Proceeds from the sale of bonds must be used for the acquisition of forest and forest lands that are subject to a conservation restriction, which is defined as a perpetual restriction that achieves specified conservation goals. The Senate and House will have to meet, presumably in the first several months of 2008, to work out the differences between their respective version. The House has no 1031 language in its bill.
The Farm Bill also modified the current 1031 like-kind exchange transaction to exclude commodity payments as part of the 1031 transaction. NAR sent a letter opposing this provision, and will continue to oppose this during the Conference Committee's deliberations, scheduled for early in 2008. The actual language of the exclusion is attached. View Document (MS Word: 21K)
Energy Bill Passes Congress, President Makes It the Law
Congress passed the Energy Independence and Security Act, an energy bill that includes new energy efficiency and renewable fuel requirements, but does not include renewable electricity requirements or energy tax incentives. NAR is beginning its analysis of this complex piece of legislation to asses its impact on real estate. Additional information will be provided when NAR completes its analysis. In the interim, attached is a brief article which discusses a few of its main provisions: View Document (MS Word: 30K)
EIA Projects Renewable Energy use Doubling by 2030
The nation's ethanol and other renewable energy sources will double by 2030, according to the Energy Information Administration, the government's leading energy forecasting agency. In an early release of its Annual Energy Outlook 2008 (the full report will be issued early next month), the EIA says the United States will continue to rely on oil, natural gas and coal for its main energy supplies through 2030, but will see a higher level of renewable energy consumption, partially the result of both higher energy prices and more state renewable portfolio standards. The agency says U.S. ethanol consumption will grow from 5.6 billion gallons in 2006 to 13.5 billion gallons in 2012 (the current congressionally mandated renewable fuel standard calls for 7.5 billion gallons in 2012), then grows to 17 billion gallons in 2030. State requirements for utilities to generate more of their electricity supplies from renewable sources will double renewable energy consumption, including wind energy, solar power and biomass.
The EIA forecast predicts that 83 percent of the nation's energy needs will continue to be met by oil, natural gas and coal. However, the report does not take into account legislation being considered by Congress to raise fuel efficiency standards for American cars and trucks by 40 percent by 2020, and raise the renewable fuel standard to 36 billion gallons by 2022. Also, the EIA outlook assumes no changes in current policy and reflects no advances in technology.
To see the early release of the outlook, go to http://www.eia.doe.gov/oiaf/aeo/index.html.
NAR Shares Perspective on Wetlands Bill With the Corps of Engineers
Attached is a statement NAR sent to Chip Smith, in the Office of the Assistant Secretary of the Army (Civil Works), in response to a recent e-mail request to selected organizations regarding their positions on H.R. 2421, the Clean Water Restoration Act. NAR has serious regarding this legislation and its impact on economic development, real estate and property rights. This legislation has been the subject of hearing in both the House and Senate in the latter half of 2007, and NAR will continue to monitor these bills closely. View Document (MS Word: 25 KB)
