Vermont Legislature SmartTranscripts:

[Rep. David Durfee (Chair)]: Would you think it would be helpful if we either pull up a language, or do you wanna share language, or do just wanna chat?

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Sure. I mean, I can I can probably sorry? I should've thought of that. I could've I couldn't log in. The link the the text hasn't changed as far as the miss oh, sorry. Yeah. Go ahead. Director of property evaluation and review at the tax department. So I was here to talk about a couple of current use related items in our miscellaneous tax bill. And I did listen. We we keep in pretty close contact across agencies. We have a weekly meeting where we all kind of figure out what's going on that we might be interested in. And then Steve Collier and we communicate regularly. So he gave me a heads up and I'm like, yep, no, I'm watching you right now. So I think there were some questions about the expansion of demonstration of annual gross income from the sale of farm crops to include grazing rights on the per head basis for the instance in which it's under 25 acres and it needs to demonstrate that annual gross income of at least $2,000 I think, like I might've said when I first came to you all, none of these are deal breakers or particularly high need. So if there's any discomfort, I'd on the side of not including it. That's fine. We did talk with ag before we stuck it in here, and they were in favor of it. The idea being that, so if you are a farmer who is needing to, lease great basically lease property from, another individual for grazing in this case, and you were compensating them $2,000 and we would have to verify that in our federal income tax return review, that that could count as a farm crop. So if you do it with hay and you get the $2,000 under current statute, it can qualify. But if the cattle or llama or whomever is eating the grass right off the ground right now, that's not allowed. But I also understand I'm incredibly cautious about changing anything in current use. So I know there were some questions about how that would be measured or what does that really look like. So I'm happy to answer any questions anyone has.

[Rep. David Durfee (Chair)]: That's

[Rep. Michelle Bos-Lun (Member)]: Go ahead. Can you say again how it's verified? So if someone pays me $2,000 that you have to be able to see it under my tax returns, is that what you

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Right. So there's a Schedule F, I think it is, on the federal income tax return. That's what we're checking for everything related to current use that requires an income review. So we're looking at federal income tax returns. So that would similar to the other item. I think I might've been in this committee on the donation of farm crops is another one that's sort of floating out there. You've got to do that somewhere where you can demonstrate that, that donation to a government entity or a five zero one(three) or something that we can verify. Otherwise, could be There's nothing official that says there was truly annual gross income as defined by the IRS.

[Rep. Michelle Bos-Lun (Member)]: Just curious, not that it makes that much difference in terms of whether we agree with this, but how easy is it for fraud to occur with this kind of stuff? I guess fraud can happen anywhere easily.

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: It's tough. I do think it's asking a lot of our administrative team who's reviewing current use applications for eligibility in the program to also sort of have to do compliance. We do do good standing checks using our compliance division at the tax department. So obviously someone's not in good standing with the tax department or there's other concerns and that gets flagged and we get assistance from our compliance division. I don't know that if we're looking at a federal income tax return that we have a way of knowing if it's fraudulent or not, but if it has come up or anything else that that individual or entity has gotten flagged by the tax department for being under review by compliance. That does show up when we do that review and then we can ask more questions. But yeah, mean, filing your federal income tax return fraudulently, I would hope would carry some weight. We can't just accept a piece of paper or a letter saying, hey, so Jill paid Michael $2,000 It's gotta be something that you've actually declared on an income tax return.

[Rep. David Durfee (Chair)]: In this case, the Schedule F is being filed by the farmer, the owner of animal that's grazing.

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Well, this would be allowing whoever owns the land would get $2,000 from, in this case, grazing rights to a farmer, and that would count as agricultural use.

[Rep. David Durfee (Chair)]: And then you as landowner has to file that schedule.

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Yeah. And I'm the one getting current use benefits.

[Rep. Michelle Bos-Lun (Member)]: In 2,000, you have

[Rep. David Durfee (Chair)]: to file it with your taxes. If you pay me the $2,000 as a landowner who's not a farmer And I'm your land. Yeah. Yeah. Okay. So that was a question of which party are both filing the Schedule F in this instance?

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: So, right. So if farmers buy income is another way that under 25 acres can be eligible, that would be that individual's Schedule F. But for this grazing rights, it doesn't matter who owns it, but if they're leasing it to a qualified farmer or getting more than $2,000 from the sale of farm crops, then it's agricultural use. So the other thing that staff has brought up is there may not be I mean, I think I mentioned there was one case that I could think of, but there may not be a whole lot of benefit to this because if you're going to spend $2,000 on paying someone to graze, most of the home value, most of the value of your property, if it's under 25 acres, probably a house site. So then like, you're really not looking at necessarily some the the way of having a lien put on your property may not be worth, you know?

[Rep. David Durfee (Chair)]: Looks like going into current use.

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Yeah. Yes. Because then once once you're eligible and you're enrolled under this, then you have a lien on your property and to get out of it, you'd to pay land exchange tax.

[Rep. David Durfee (Chair)]: That's a consideration. Know, it's. Representative Nelson.

[Rep. Richard Nelson — roll call response]: Thank you. So, Jill, person a owns, buys, has an old farm and they get out of farming. They still own their own farm, 250 acres. They rent it to farmer b up the road, Whole thing. Was it in Landowner.

[Rep. John L. Bartholomew (Vice Chair)]: In current use?

[Rep. Richard Nelson — roll call response]: What? It's in current use.

[Rep. John L. Bartholomew (Vice Chair)]: Okay.

[Rep. Richard Nelson — roll call response]: Landowner a does not file. Do they still need to file a schedule at or because they've got a written lease with farmer b who is a farmer and files a schedule at that allows that way to stay in current use?

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Right. So if it's a qualified farmer leasing it, that counts, especially over 25 acres.

[Rep. Richard Nelson — roll call response]: Because with 25 acres of land, if landowner a is gonna show $2,000 of income from grazing, that's $80 an acre. That's not gonna fly in the cow world. I don't even know if it flies in the sheep or goat world. Horses? That'd be honest with secretary. Yeah. You know, so like, I don't under if if but if it's a qualified farmer who's leasing that 25 acres, and he's gotta put a fence on it, he probably isn't gonna give him anything. But he's gonna keep it grazed down and gonna have a fence, and it has a potential of looking nice except for where the oddball thistle is because they feed nitric seed to their

[Rep. David Durfee (Chair)]: I think that so so we think all are sensing that, well, hey, we know based on what we've heard from the tax department, it's only happened once in recent memory anyway.

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: And it was a sympathetic case. It was a reasonable case where it's like, for all intents and purposes, is this what we want? This property had been in a farm at some point and it was being grazed and there was this arrangement. Right. But

[Rep. David Durfee (Chair)]: And it was $2,000 exchanged or something, at least enough money. And then we've heard just in the conversation we've had that it seems like maybe this wouldn't happen very often just because the dollar amount would be more than the owner of the animals would be willing to pay. So there's that. And I think we ought to weigh that against whatever other concerns there might be. And I think there were some concerns yesterday about go ahead, Chuck.

[Rep. John L. Bartholomew (Vice Chair)]: How small can a after parcel be that's leased?

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: I mean, think the lowest we have in the program is one acre. You can do that. Pretty small.

[Rep. David Durfee (Chair)]: You can do an acre.

[Rep. John L. Bartholomew (Vice Chair)]: And you can roll that in current use?

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Yes, we have an acre in current use.

[Committee Assistant (Staff)]: I was wondering, growing farm.

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: I know, I really should have asked before I came over here because somebody mentioned that and more staff was like, just so know, this is the Yeah, it's probably vines. It's probably vines.

[Rep. David Durfee (Chair)]: Yeah. So if it's forest land, it's 25 acres, but for farmland, there's no minimum? Is that right?

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Oh, to enroll.

[Rep. David Durfee (Chair)]: To enroll, yeah.

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Right, and under 25 is very different requirements you have to meet. To get to enroll.

[Rep. John L. Bartholomew (Vice Chair)]: Just one other thing. When I was growing up, farmers would pay that property owner to make hay, say, on a field. Then it got to the point where no money was exchanged, and now it's to the point where the property owners are paying the farmers the hay and the land a lot. So how does that work also with it like this and the Schedule F in that is it almost like an in kind thing or you have to declare I'm making money as well as getting a crop?

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Under the proposal or under the current? Under current. So if there's a qualified farmer, that's that threshold. The qualified farmer is leasing it or owns it. It it's in here. This is if somebody who's not already a qualified farmer is, and it's not leasing it to a qualified farmer, but is producing this income from what they're earning from that smaller acreage. Yeah, I think right now a lot of times this is in kind or one the meat exchange of using that.

[Rep. John L. Bartholomew (Vice Chair)]: There's no money, but there's value to a crop though.

[Rep. David Durfee (Chair)]: Got it.

[Rep. Michelle Bos-Lun (Member)]: But I

[Rep. Gregory "Greg" Burtt (Member)]: mean, it just seems like if they're selling grazing rates, it's interesting that they wouldn't have a lease with person, agreement with that person, which would be point B on. Right.

[Rep. David Durfee (Chair)]: Then you wouldn't have to

[Rep. Gregory "Greg" Burtt (Member)]: worry about how many dollars worth it is to be screaming for the farmer who doesn't have the dollar value on that part of A and Right. Seems like a very narrow set of situations. Yes, no, it's not.

[Rep. David Durfee (Chair)]: I think the question came up yesterday about grazing, or maybe today, somebody said horses too. This doesn't distinguish between, and are horses livestock in this context?

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: They're livestock? Yes, they're livestock.

[Rep. Gregory "Greg" Burtt (Member)]: They're for.

[Rep. John L. Bartholomew (Vice Chair)]: Meet the rats if they're for.

[Rep. Richard Nelson — roll call response]: Okay.

[Rep. David Durfee (Chair)]: That's

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: It's, yeah, I'm so gonna start to put down the horse eligibility for that. Mean, you

[Rep. David Durfee (Chair)]: could be, it could be,

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: you could graze all kinds of things on here, right? But the same with the hay, I could hay and give it to my rabbits. All

[Rep. David Durfee (Chair)]: right. So just to reiterate, the tax department and the ag agriculture agency are supportive of this. That's it was the proposal, I think, came from the tax department. And we've had some conversations, probably not that we should spend too much time on the committee working on, but I don't want to cut it through. Well, I I go look at everybody. Maybe not maybe not, like, literally, but if we yeah. I mean, if we're if we're feeling like, yeah, this is okay. We don't really need to know too much more about it. Go ahead and just do a straw poll and let the ways and means committee know that we took some testimony and I'll follow the storm. And then maybe, you know, maybe next year, the tax department will be in again or in in three years and say, you know what? We we have another suggestion. Turns out that

[Committee Assistant (Staff)]: Be prepared to do a straw now, right?

[Rep. David Durfee (Chair)]: I think we could do a straw poll now, yeah. Is there a bill or number? You can say miscellaneous tax bill.

[Committee Assistant (Staff)]: Were there

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: any other questions about the land use change tax in the case where we can't get a number otherwise? That was the other piece in here. No?

[Rep. David Durfee (Chair)]: Oh, the the the section that gives the town and the commissioner the ability to step in and move things along. Yeah. No, I think that was I don't think we had any issues with that. No, that makes a 100% sense. That makes a lot of sense. Bring us more of those.

[Rep. Richard Nelson — roll call response]: Can I ask a question? Because we have a where would the tax department be if we made it so that you wouldn't have to reenroll your property in the current use every year? In other words, you buy a farm or you're a farmer and you're in current use, you're in current use until you have a property transfer to take it out of current use. You don't have to do that paperwork every year.

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: The agriculture certification?

[Rep. Richard Nelson — roll call response]: Yeah.

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Would welcome not doing the agriculture certification every year. It's a lot of work for Yeah. It's a lot of administrative burden with not necessarily a lot of benefit. I think the first few years, the argument is there was a lot of good information that came from that new requirement. This is a requirement that any agriculture parcels about, there's like 7,000 or agriculture only have to annually certify that it's in the program. And I think the explanation was if you're in forest, if you're enrolled under forest, you have a forest management plan. You have county foresters that are overseeing that work. You have to file a forest management activity report. And so there was no similar expectation for any kind of checking in on agriculture. But frankly, the most part, it is a lot of work with very little benefit.

[Rep. Richard Nelson — roll call response]: I wouldn't even be upset if you put greater penalties if someone tried to slide it out without telling anybody and without paying the

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Mhmm.

[Rep. Richard Nelson — roll call response]: 10% use value tax if you bump that up to 15 if they tried to do a fly by night deal. But the this paperwork catches good people sometimes at a bad time and they don't get it done, and all of a sudden they get their tax bills, and as we were talking about earlier,

[Committee Assistant (Staff)]: and I've

[Rep. John L. Bartholomew (Vice Chair)]: heard a lot of concern from Is this the CU three thirteen or whatever it is, what's that?

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Yeah, Yeah. It is CU three thirteen.

[Rep. John L. Bartholomew (Vice Chair)]: That's it. And then so Uh-uh. We've applied

[Rep. Richard Nelson — roll call response]: this to a committee bill.

[Rep. John L. Bartholomew (Vice Chair)]: The PB you know? If we are like

[Rep. Richard Nelson — roll call response]: to Remnant is. Okay, well then I think it's something that we could do and make life just a little bit easier for our partners. Let's, yeah,

[Rep. David Durfee (Chair)]: I don't know the history. It sounds like this has not always been the case, Joe.

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Right, I think this came about in the 2015, the big there were a lot of pieces that came into play in the twenty fifteen, twenty sixteen legislative session. And truly, if we had the time and the manpower and the ability to do the level of compliance, I think it was expecting that would be different. And also it does sound like when it was first instituted, there were a lot of missing or not accurately enrolled parcels, but that it really is, we've come in the past maybe saying like, well, could we do one county every year and have, okay, this is the year that parcels in this county submit that to us. And obviously, you know, I understand the, the want for a rationale, like some sort of oversight every year of, and we, you know, people use it to like, let us know if their address changed or if they have made a change that's that catches those things. They say, yeah, I have, but then they still gotta do the transfer. So they still have to do the other work associated with that. Or if they've added a building or anything that if we see that on the ag cert, then we're still reaching out to them to say, okay, now can you enroll that building? Or can you file an LV three and remove it? So it does provide some things, but those are things that should happen outside of the ag cert.

[Rep. David Durfee (Chair)]: So if a farmer inadvertently if somebody who's enrolled inadvertently fails to complete that paperwork by a deadline, I think we added a provision that gives the commissioner the ability to go in and confirm that they are enrolled. But if that were to happen, then a farmer who was legitimately using land for the intended purpose could be stuck with a huge bill, the difference between the current value and the

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Well, it would start a process. So they wouldn't just, okay, all of a sudden they've got They would get a notice saying, failed to meet this. Can you have thirty days to get it to us again? You've got thirty days to get to us again. We send out multiple reminders and then they would get an LV three fourteen saying, you know, we are initiating withdrawal from the program. So, but yeah, that, that is the idea, right? If it's no longer eligible, it needs to be removed from the program or at least, you know, some conversation has to happen to figure out what has happened. So I don't want to make light of the fact that it is, it is a really important program that needs to be accurate, and that people absolutely need to communicate. I would always say if nothing else, like you're going to do anything to your enrolled current use property, call and say, what do I need to do? Because there are a stitch in time saves nine kind of things. If you let us know, we can tell you, Okay, you need to submit this. You know, you need to add this building for this year, or you need to, you know, the PTTR, when someone has purchased property that's enrolled in the program, they now get a letter that says, Hey, just so you know, you just purchased property that's in the current use program. You need to apply. Right? So there's, we're trying to chase everything, there are steps for all that. But the agriculture certification is a lot of work every year with limited benefit.

[Rep. David Durfee (Chair)]: And to the extent that there is a benefit, it's making sure that everybody who's enrolled is legitimately enrolled so that the education fund is not being deprived of money that it should have.

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Right. Yes. Right. And and, yeah, that it's that our enrollment is accurate. Property tax bills are accurate, it's being administered correctly.

[Rep. John L. Bartholomew (Vice Chair)]: Okay, everybody. Yeah. What happens when, like Richard's story of

[Committee Assistant (Staff)]: a

[Rep. John L. Bartholomew (Vice Chair)]: farmer, two fifty acres just stops farming and it's in current use, whether they sell their animals or they were making hay and they just stop haying, does anything change with current use?

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: So they withdraw from the program if it's no longer eligible. So it's no longer being used for agriculture But the land use change tax isn't due until they do something with it. So until the land use change tax is so if if they

[Rep. John L. Bartholomew (Vice Chair)]: They sell it. Right.

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: So we have liens going back to the '80s, theoretically, of property that's been removed from the program. They're paying the full property tax bill from that point on. But the lien sits there until either they want the lien removed and they pay the land use change tax, or they break up the parcel or do anything else to the parcel that sort of makes the land use change tax. There are properties out there, but they're once they've withdrawn, once they're no longer eligible, then they're paying their full property tax bill. Right? It's not that nothing happens. That's, that's what happens. But the lien is there until the land exchange tax is paid.

[Rep. John L. Bartholomew (Vice Chair)]: There must be a certain number of farms that haven't left the program. They just petered out farming, but they're still

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Still have a lien on?

[Rep. Richard Nelson — roll call response]: Yep. There's pieces of land.

[Rep. John L. Bartholomew (Vice Chair)]: Right, more like that.

[Rep. Richard Nelson — roll call response]: That have been purchased for development, they haven't been developed yet that are paying full property tax, but their land.

[Rep. John L. Bartholomew (Vice Chair)]: Haven't paid the transfer.

[Rep. Richard Nelson — roll call response]: I know it's brought in a challenge.

[Rep. Gregory "Greg" Burtt (Member)]: Yeah, And

[Rep. David Durfee (Chair)]: so the farm has been in it since nineteen eighty something, the land use,

[Rep. Gregory "Greg" Burtt (Member)]: if they get out of current use, the farm,

[Rep. Richard Nelson — roll call response]: so it's not a farm anymore.

[Rep. Gregory "Greg" Burtt (Member)]: And if that wasn't re enrolled in current use, what would be the penalty of the tax on that? Could be all the accumulated tax?

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: No, that's how some states do it. It would still be the land use change tax is always calculated at the time it's no longer eligible. So we have pieces of paper written out when that's happened in the '80s and '90s. And now when we find out that property, whether we are notified or we find out that they're no longer eligible, then that starts that land use change tax process. And that value is set at the time it's no longer eligible. And that's what the 10% will be based on. So even if it's ten years later, it's going to be based on that figure that was calculated at the time it was no longer eligible.

[Rep. Gregory "Greg" Burtt (Member)]: So how long has been in the program before?

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Right.

[Rep. David Durfee (Chair)]: So if you bought it last year or if you purchased it the eighties, that's not that doesn't apply. It's not calculated.

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: It's not it's not time adjusted. No.

[Committee Assistant (Staff)]: Jed? I just rap O'Brien talk if someone stopped farming and never notified anyone, how how could and continue getting a reduced valuation. Right. Does how can that happen?

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Well, that's what the agriculture the annual agriculture certification does catch that. Or

[Committee Assistant (Staff)]: That shouldn't happen. Not that it hasn't. Right.

[Rep. Richard Nelson — roll call response]: I'll go send up the server and let him vent check. Alright.

[Rep. David Durfee (Chair)]: You know That's the letter you put the solar back. There

[Committee Assistant (Staff)]: is a rep who needs to leave soon.

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: I have somebody waiting for me downstairs, so I would like to know

[Rep. John L. Bartholomew (Vice Chair)]: if can do a new way. Yeah. Alright.

[Committee Assistant (Staff)]: You know, it's the miscellaneous tax bill, 02/13/1250.

[Rep. David Durfee (Chair)]: The motion is to Two fifty. To concur with Concur favorably.

[Committee Assistant (Staff)]: John L. Bartholomew? Yes. Yes. Michelle Bos-one?

[Rep. Michelle Bos-Lun — roll call response]: Yes. Gregory Greg Burtt? Yes. Jed Lipsky? Yes.

[Committee Assistant (Staff)]: Doctor. Melvin?

[Rep. Richard Nelson — roll call response]: No, that'd my lawyer. Yes. John

[Committee Assistant (Staff)]: O'Brien? Yes. Casey Toof, it's not a part of it. Chair Durfee? Yes. And the vote is seven zero zero zero.

[Rep. David Durfee (Chair)]: Thank you, Joe.

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Alright. Thank you. And I I did wanna give you folks a heads up. We've we I'm gonna have a we're gonna see if we can add another technical change to be a little more flexible about how many signatures we require on forest management activity reports, but I can come and talk about that another time.

[Rep. David Durfee (Chair)]: Is that for this before

[Jill Remick, Director of Property Valuation & Review, Vermont Department of Taxes]: Yeah. I think we're gonna need to get it on the missing text. Just it's another one of those, like, trying to chase down a million signatures for filing a forest management act