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Minnesota Farm Bureau Comments on Legislative Session

Tue, Jun 4th, 2013
Posted in All State of Minnesota

“The recently completed Minnesota legislative session took some positive steps forward for Farm Bureau and agriculture in Minnesota, but in the area of taxes, we may have taken a few steps backward,” said Minnesota Farm Bureau Federation (MFBF) President Kevin Paap. “There was a flurry of activity, especially in the area of taxes, the last few days of session, and the results of that legislation have been coming to light in the last several days.”

On the positive side

Legislation was signed clarifying that agricultural property held in a Family Farm Trust, LLP or LLC will qualify for the extra $4 million exemption from the state estate tax for a total exemption of $5 million. The agriculture property must be the homesteaded 2a property of decedent for three prior to death and remain 2a property for three years after death. Farmers and ranchers need to check with their estate planners and accountants for further details.

A proposed increase in the water appropriation permit fee was not adopted. This is a permit needed for pumping large amounts of water for livestock farms or irrigation wells.

Issues of Concern

The state sales tax was extended to labor on repairing and maintaining equipment. We were assured this would not apply to farm machinery. The final version of the tax bill that passed did not specifically exempt labor on farm machinery repair. The tax will start to be collected on July 1 this year.

The state sales tax was extended to include warehousing and rental services. Agricultural products were exempted from this tax. We are working with Minnesota Department of Revenue as they define agricultural products. This provision does not go into effect until April 1, 2014.

A tax was imposed on gifts. The final details on how this tax will work are being developed. This tax could impact farmers and ranchers.

“It is clear that Farm Bureau will be very involved in tax issues during the 2014 legislative session that starts in late February next year,” said Paap. “In discussion with legislators, it was clear the intent was to not expand the state sales tax to include labor on farm machinery repair. Repealing this new tax will be a priority for Farm Bureau next year.”

The Minnesota Department of Agriculture (MDA) received legislative authority and funding for their Agriculture Water Quality Assurance Program. Program details should be coming out this summer. The program will be piloted in a few watersheds in Minnesota. Farmers and ranchers living in the watersheds will need to take a hard look at the program details to see if this MDA program will fit their farms.

“Farmers and ranchers need to be fully engaged with their legislators over the coming months and explaining the impact of the new taxes,” said Paap. “We need to work with legislators to ensure we have a business climate in Minnesota that supports agriculture, not stifles it.”

Minnesota Farm Bureau Federation represents Farmers • Families • Food and is comprised of 78 local Farm Bureaus across Minnesota. Members make their views known to political leaders, state government officials, special interest groups and the general public. Programs for young farmers and ranchers help develop leadership skills and improve farm management. Promotion and Education Committee members work with programs such as Ag in the Classroom and safety education for children. Join Farm Bureau today and support our efforts to serve as an advocate for rural Minnesota,

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