Farm Transition Planning Conference Planned for August

The Cultivating Connections Conference, an annual event dedicated to farm transition planning, is returning for its second year on August 5th and 6th, 2024. This year’s conference will be held at the University of Cincinnati College of Law and will convene farm transition planners—attorneys, accountants, educators, and other professionals—from across the country.

Cultivating Connections serves as a forum for learning, discussing, and collaborating on the latest strategies, tools, and legal and tax aspects of farm transition planning. The conference fosters a supportive community dedicated to preserving the legacy and sustainability of family farms for future generations.

Conference Highlights:

• In-depth sessions and workshops: Featuring a real-life case study, the conference delves into practical farm transition planning techniques, estate planning considerations, and tax implications.
• Networking opportunities: Attendees can connect with peers, share experiences, and build relationships with a network of farm transition professionals.
• Expert speakers: The conference brings together a distinguished faculty of attorneys, accountants, professors, and other professionals who share their knowledge and insights.
• The Association of Farm Transition Planners: This newly formed association offers ongoing support and resources for farm transition professionals beyond the conference.

Registration and More Information

For detailed information about the Cultivating Connections Conference agenda, speakers, and registration, please visit https://go.osu.edu/cultivatingconnections or use the QR code below. For more information or questions, contact Robert Moore (moore.301@osu.edu).

About the Cultivating Connections Conference

The Cultivating Connections Conference is a partnership between The Ohio State University Agricultural & Resource Law Program, Iowa State University Center for Agricultural Law & Taxation, and the National Agricultural Law Center.

New Bulletin Available: The Charitable Remainder Trust Strategy for Retiring Farmers

One of the primary challenges for a retiring farmer is the large tax burden that retirement may cause.  Throughout their farming careers, farmers do a good job of managing income taxes, in part, by delaying sales and prepaying expenses.  This strategy works well while the farm is operating but can cause significant tax liability upon retirement.  The combination of a large increase in revenue from the sale of assets and little or no expenses to offset the revenue can cause a retiring farmer to be pushed into high tax brackets.  It is not unusual for 40% or more of the sale proceeds from a retirement sale to go to taxes.  One strategy to reduce income tax liability at retirement is a Charitable Remainder Trust (CRT).  A CRT can be an effective way of managing income taxes at retirement, but it is not for everyone. 

A CRT is a charitable trust because at least some of the assets in the CRT must eventually pass to a qualified U.S. charitable organization such as a church or 501(c)(3) corporation.  This charitable nature of the CRT is central to the CRT strategy.  As a charitable trust, the CRT may sell assets without paying tax on the sale.  So, instead of the retiring farmer selling assets in their own name, they donate the assets to the CRT and then the CRT sells the assets.  The retiring farmer then receives an income stream from the CRT.  After a period of time, the income stream stops and the remaining trust assets are contributed to the named charity.  The following are the steps of the CRT strategy:

1. Assemble a team of advisors and develop a CRT strategy.
2. Donor establishes a CRT.  The trust document declares the income beneficiaries and the charitable beneficiaries. 
3. Donor determines the assets to be contributed to the CRT.
4. Donor contributes assets into the CRT, typically grain, machinery and/or livestock.
5. The CRT sells the assets but does not pay tax.
6. The Trustee of the CRT uses the sale proceeds to establish an annuity.  The annuity must be designed to provide at least 10% of the sale proceeds to the charity.
7. The annuity pays out to the Donor over a number of years.  The Donor pays income tax on the annuity distributions.
8. When the trust is terminated, the charity is paid the remaining assets.

CRTs are best used in situations where the retiring farmer does not have a successor and must sell all operating assets.  CRTs should generally not be used when the farming operation is to be passed along to the next generation.  A CRT can be an excellent strategy to help a retiring farmer reduce income tax liability and provide a charitable donation but it is not for everyone.  Be sure to consult with your team of advisors before deciding upon or implementing a CRT.

For a detailed discussion of CRTs, including advantages and disadvantages, see the new publication Charitable Remainder Trusts as a Retirement Strategy for Farmers available on farmoffice.osu.edu.

Agritourism operators: now is the time for liability risk management

Many of Ohio’s farm markets, u-picks, farm petting zoos, and other “agritourism” operations are preparing to open for their spring and summer activities.  While these types of agritourism activities are popular, they raise unique liability concerns. That’s because there is always the risk of an injury or harm when bringing people onto the farm, whether allowing them to be near animals, riding on equipment, in crop and orchard areas, or engaging in physical activities.  Along with readying the farm for the new season, agritourism operators should also plan for the possibility of a liability incident. 

Here are five actions agritourism providers can take to manage liability risk.

1. Conduct a safety review.   Inspect your operation with visitor safety in mind.  Remember, many visitors have never been on a farm or don’t understand what might harm them on a farm. Examine all areas visitors will be in, including surrounding “off limits” areas visitors might try to access, and identify any possible safety hazards.  Pay extra attention to areas children will use. Consider these questions:
   • Are the facilities, fences, gates, steps, play areas, and other structures in good repair?
   • Are doors and gates working and latching properly?
   • Are pesticides, herbicides, or chemicals out of sight and inaccessible?   
   • Are animal enclosures sound, do any “dangerous” animals need to be fully off limits to visitors, and are there handwashing stations near animal contact areas?
   • Are there any accessible dangers that might attract children, such as ladders, equipment, lagoons, large tractor tires, and wells?
   • Are parking areas and walkways sufficiently sized and buffered from traffic?

Look for the potential dangers, then take actions such as making repairs; installing blockades, fences, locks, or other structures to keep visitors away; putting up signs and warnings; providing instructions or maps; expanding parking areas or walkways; and removing unnecessary dangers.

2. Complete our Agritourism Ready course.  Be prepared for the possibility of an emergency situation—both natural and man-made disasters can raise the need for an emergency response. How an operation responds to an emergency can reduce harm to visitors and ultimately affect the operation’s risk of liability or harm.  OSU offers a curriculum that helps agritourism operations reduce risks by developing an emergency management plan.  Access this valuable and free resource at https://u.osu.edu/agritourismready/.
3. Train employees.  A business is legally responsible for the negligence of its employees, so it’s important to reduce the risk that an employee’s actions will cause or contribute to a visitor’s harm.  Provide thorough safety training to agritourism employees.  Make sure employees know how to do the job, including activities like operating equipment, maintaining and cleaning visitor areas, handling animals, overseeing children, and responding to a safety incident.
4. Obtain agritourism insurance coverage.  Insurance is an excellent liability management tool.  But be aware that a typical farm insurance policy does not cover agritourism activities, and a separate endorsement or policy may be necessary.  Even if a farm has a separate endorsement for agritourism, it’s still important to ensure that any new agritourism activities fall under the agritourism coverage. Now is the time to schedule a visit with the insurance provider and review the insurance policy.  Don’t be secretive about what you’re doing in your operation.  Share all activities with the provider and ensure that each activity is covered by the policy.  If an activity is not covered or will require costly additional coverage, weigh the risk, costs, and benefits of continuing to offer the activity.
5. Install the Ohio agritourism immunity sign.  I’ve been surprised recently by how many operations I’ve visited that do not have an agritourism immunity sign on display. Posting the sign is a critical risk management tool.  That’s because Ohio law provides civil immunity for qualifying agritourism providers if a visitor suffers harm or injuries due to the “inherent risks” of being on a farm.  To receive the immunity, however, an agritourism provider must post the required agritourism immunity sign at the entrance to or near the agritourism activities.  The agritourism immunity sign warns visitors that the operation is not liable for harm from inherent risks and that they are assuming the risk of participating in agritourism activities. But while it’s an important tool, don’t let the sign replace all of the other recommendations provided in this article.  Read more about the immunity law and the agritourism immunity sign in our law bulletin, Ohio’s Agritourism Law, available on farmoffice.osu.edu.

Agritourism is a thriving industry in Ohio. Taking legal precautions to manage liability risk will help ensure that agritourism remains an important component of Ohio agriculture. To learn more about legal issues in agritourism, visit OSU’s Agritourism Law Library on the Farm Office website at farmoffice.osu.edu/law-library.

Transferring Farm Operating Assets at Retirement

Retirement means different things to different farmers.  For some, retirement is the slow, gradual process of turning over the farming operation to the next generation. For others, retirement may be the immediate sale of operating assets when there is not an heir to take over the farming operation.  Regardless of the type of retirement, operating assets will often be transferred.  This article will discuss the different strategies to transfer operating assets and the implications of each strategy.

Strategy #1.  Gifting

The gifting of assets is the simplest transfer strategy.  Gifting works best when the assets are being transferred to a family member and no income is needed from the assets.  While gifting may seem like the obvious best solution if transferring to a family member, there are significant negative tax implications to gifting that should be considered.

Advantages

• Simple

• Ownership is transferred relieving owner of liability and responsibility for repairs and maintenance

• Helps next generation

Disadvantages

• No income to owner

• Loss of stepped-up tax basis

Strategy #2. Outright Sale

When income is needed from operating assets, a sale may be the best transfer strategy.  Because many operating assets are untitled, a sale can be completed rather easily.  The buyer provides the funds and the sale is completed.  An outright sale is considered to be a sale that involves all assets being transferred simultaneously with a payment for the entire sale.

Advantages

• Creates income

• Relieves owner of liability and maintenance responsibilities

Disadvantages

• Tax liability is usually significant due to little or no tax basis and depreciation recapture

• Will use resources of next generation of farmer

Strategy #3.  Gradual Sale

Instead of an outright sale, assets can be sold gradually, over time.  Usually in this strategy, a few items are sold each year until transfer is complete.  The sales can happen somewhat uniformly each year or be adjusted as the seller needs income and/or the buyer has available resources to purchase.

Advantages

• May help keep seller in lower income tax brackets by spreading out income

• Relatively simple

Disadvantages

• Owner must wait to receive income for all assets

• Owner retains some ownership and thus retains some liability and responsibility for maintenance

Strategy #4. Installment Sale

An installment sale involves the sale of the assets with payment being made over a number of years.  This strategy may seem attractive as a way to sell assets and spread income over time.  However, an installment sale is often the worst strategy when selling operating assets because the IRS requires all depreciation recapture taxes to be paid in the first year of the installment sale.  Be sure to discuss an installment sale with your tax advisor before implementing this strategy.

Advantages

• Transfers ownership immediately to eliminate liability and maintenance

• After the taxes are paid in year 1, little or no taxes may be owed on the remaining payments

Disadvantages

• All depreciation recapture tax is due in the first year of the installment sale

• Risk of buyer not making payments

Strategy #5. Lease with Purchase Option

A lease allows payments to be spread over the term of the lease with taxes due upon receipt of each payment, rather than all due up front.  The person leasing the machinery can then be given the option to purchase the machinery upon the expiration of the lease.  For the retiring farmer who needs income from their machinery, this is a strategy worth exploring.

Advantages

• Spreads income and tax liability over the term of the lease

• May help cash flow for buyer and lease payments are a deductible expense

Disadvantages

• Ownership is retained so remain liable for the asset

• The “Buyer” does not own the asset so cannot use as collateral

• It can be complicated to determine lease rates when machinery is traded, replaced or sold

Strategy #6. Integrating a Business Entity into the Transfer Plan

Using a business entity, such as a limited liability company (LLC) , for the transfer of operating assets can have multiple benefits.  An LLC can reduce liability exposure, simplify the transfer process, and reduce tax liability.  Anyone transferring operating assets should consider incorporating an LLC into the process.

Advantages

• Will provide liability protection for the owner of the assets

• Sale of entity ownership is usually considered a capital gain which is taxed at lower rates

Disadvantages

• Can cost up to several thousand dollars to set up

• Business entity requires management such as accounting, bank accounts and tax returns

Strategy #7.  Charitable Remainder Trust

A Charitable Remainder Trust (CRT) can be an excellent strategy for the retiring farmer to sell operating assets without immediate tax liability, receive a long-term flow of income and make a charitable contribution.  The strategy involves establishing a charitable trust, transferring operating assets to the trust, then selling the assets through the trust.  Due to the charitable nature of the CRT, no tax is due upon the sale of the assets.  The CRT then establishes an annuity for the retiring farmer which generates annual income.  At the termination of the CRT, the remaining principal in the CRT is donated to the charitable beneficiary.  The CRT strategy is the most complicated strategy and will require the most legal and accounting fees.

For a detailed discussion of the CRT strategy, see the Charitable Remainder Trusts as a Retirement Strategy for Farmers bulletin available at farmoffice.osu.edu.

Conclusion

There are several strategies that can be implemented to transfer operating assets at retirement.  There is no perfect strategy, each one has advantages and disadvantages.  A thorough analysis of the implications to income, taxes, liability and cash flow of each strategy should be performed before deciding on the preferred strategy.  Working with knowledgeable tax and legal counsel can help with the decision-making process and reduce the chances of unwanted or unexpected outcomes.

For more information on these strategies, see the Strategies for Transferring Farm Operating Assets bulletin available at farmoffice.osu.edu.

The Ag Law Harvest

As April comes to a close, we bring you another edition of the Ag Law Harvest. This month’s harvest brings you laws and regulations from across the country regarding a national drinking water standard, the Endangered Species Act, Ag-Gag laws, noncompete agreements, and pollution. 

EPA Finalizes First-Ever PFAS Drinking Water Standards
Earlier this month, the U.S. Environmental Protection Agency (“EPA”) announced a final rule, issuing the “first-ever national, legally enforceable drinking water standard to protect communities from exposure to harmful per-and polyfluoroalkyl substances (PFAS), also known as ‘forever chemicals’”. The final rule sets legally enforceable maximum contaminant levels for six PFAS chemicals in public water systems. The EPA also announced nearly $1 billion in new funding to “help states and territories implement PFAS testing and treatment at public water systems and to help owners of private wells address PFAS contamination.” The EPA suggests that this final rule “will reduce PFAS exposure for approximately 100 million people, prevent thousands of deaths, and reduce tens of thousands of serious illnesses.” 

Interior Deptartment Finalizes Rule to Strengthen Endangered Species Act
The Department of the Interior has announced that the U.S. Fish and Wildlife Service finalized revisions to the Endangered Species Act (ESA). These revisions aim to enhance participation in voluntary conservation programs by promoting native species conservation. They achieve this by clarifying and simplifying permitting processes under Section 10(a) of the ESA, encouraging greater involvement from resource managers and landowners in these voluntary initiatives. For more information about Section 10 of the ESA visit the U.S. Fish and Wildlife Service’s website.

Kentucky Passes Ag-Gag Statute
On April 12, 2024, the Kentucky legislature overrode the governor’s veto to pass Senate Bill 16 into law. The new law, titled “An Act Relating to Agricultural Key Infrastructure Assets,” expands the definition of “key infrastructure assets” to include commercial food manufacturing or processing facilities, animal feeding operations, and concentrated animal feeding operations. It criminalizes trespassing on such properties with unmanned aircraft systems, recording devices, or photography equipment without the owner’s consent. The first offense is a Class B misdemeanor with up to 90 days imprisonment and a $250 fine, while subsequent offenses are Class A misdemeanors with up to 12 months imprisonment and a $500 fine.

Federal Trade Commission Bans Non-Compete Agreements
The Federal Trade Commission (“FTC”) announced a final rule banning noncompete agreements and clauses nationwide. This move aims to promote competition by safeguarding workers’ freedom to change jobs, increasing innovation and the formation of new businesses. Under the FTC’s new rule, existing noncompetes for the vast majority of workers will no longer be enforceable after the rule’s effective date. However, existing noncompetes for senior executives – those earning more than $151,164 annually and in policy making positions – remain enforceable under the new rule. Employers will have to notify workers bound to an existing noncompete that the noncompete agreement will not be enforced against the worker in the future. The final rule will become effective 120 days after publication in the Federal Register.  

EPA Announces New Rules to Reduce Pollution from Fossil Fuel-Fired Power Plants 
The U.S. Environmental Protection Agency (“EPA”) unveiled a set of final rules designed to decrease pollution from fossil fuel-fired power plants. These rules, developed under various laws such as the Clean Air Act, Clean Water Act, and Resource Conservation and Recovery Act, aim to protect communities from pollution and improve public health while maintaining reliable electricity supply. They are expected to substantially reduce climate, air, water, and land pollution from the power industry, aligning with the Biden-Harris Administration’s goals of promoting public health, advancing environmental justice, and addressing climate change.

Change in Ohio law creates new “low risk” license for mobile food vendors

In time for another farmers’ market season, Ohio has a new food license available for food entrepreneurs who sell eggs, meats, and certain home-produced foods at farmers markets and similar venues.  A new “Low Risk Mobile Retail Food Establishment license” (Low Risk MRFE) offers a lower risk level license that will benefit many of Ohio’s farm-based and home-produced food vendors. Regulations establishing the new license were effective on February 12, 2024.

Ohio law has historically required an MRFE license for vendors selling certain foods from mobile units such as trucks, trailers, tents, and stalls at farmers markets and similar locations. All mobile vendors, regardless of the risk level of the food they were selling, had to obtain the same type of MRFE license.  That changes with the new regulations, which create two types of MRFE licenses, low risk and high risk, and different licensing requirements for each.

The new Low Risk MRFE license offers two positive changes for the mobile food vendors who qualify for it:

• The Low Risk MRFE license will be half the cost of the High Risk MRFE license, and,
• Low Risk MRFE license holders can use non-mechanical refrigeration rather than commercial equipment to maintain their food product temperatures.

Here’s an explanation of the new Low Risk MRFE license option.

Mobile vendors that qualify for the Low Risk MRFE license

The Low Risk MRFE license is available for mobile vendors whose activities fall into a low risk level.  Low risk level activity means the food poses a potential risk to the public in terms of sanitation, food labeling, sources of food, and food storage practices at the mobile unit, but the risk is lower than higher risk food activities. Low risk activities involve foods that were “pre-packaged” before being brought to sell at the mobile unit, and include the activities of holding pre-packaged refrigerated or frozen foods that require temperature controls for safety and offering pre-packaged foods that do not require temperature controls for safety. See Ohio Admin. Code 901:3-4-05(E)

If pre-packaged, these foods that are held and offered for sale from a mobile unit will qualify for the Low Risk MRFE:

• Eggs
• Frozen and refrigerated meats and fish
• Foods from a licensed Home Bakery that require refrigeration, such as cheesecakes and cream pies
• Cheeses and dairy products from a licensed Milk Producer or Milk Processor
• Frozen foods from a facility with a Frozen Foods License
• Cottage foods from a cottage food operation, but the MRFE is not required  if the cottage foods are sold at any of these locations:  farmers market, farm market, registered farm product auction, a political subdivision sponsored festival or celebration, or direct from the producer’s residence.

Holding temperature requirements for a Low Risk MRFE

There has long been confusion about the type of equipment an MRFE vendor must use to maintain the temperature of refrigerated or frozen foods, and some health departments have required vendors to use only commercial refrigerators or freezers.  That will change under the new rule, which allows a Low Risk MRFE license holder to choose whether to use mechanical or non-mechanical refrigeration such as ice, ice packs, gel packs, or dry ice.  The rule does not require the use of commercial equipment. 

There are several important points mobile vendors should note about the new rule:

• When applying for the MRFE license or renewal, a vendor should explain their refrigeration choice and method, and the health department might require a plan or process for replenishing the cooling material if using non-mechanical equipment.  The health department will note the refrigeration information on the MRFE license.
• The new rule requires a vendor to refresh or replenish the ice, ice packs, gel packs, or dry ice every four hours.
• A vendor should keep a working thermometer inside each cooler or refrigerating unit and be able to document that the temperature is within the allowable range for the food held in the unit.
• Gel packs and dry ice are preferred non-mechanical methods for maintaining food packaged in paper because wet ice can destroy paper packages and increase food safety risk.

See Ohio Admin. Code 3717-1-04.1(K)(K)

Lesser fee for Low Risk MRFE licenses

The new rule specifies that a Low Risk MRFE license fee will be 50% of the health department’s fee for high risk MRFEs. See Ohio Admin. Code 901:3-4-03(A)

New signage requirement for MRFEs

The new rule also requires any MRFE vendor to display specific information on the exterior of the mobile unit, in individual lettering at least three inches high and one inch wide.  The information must include:

• Name of the operation
• The operation’s city of origin
• The operation’s telephone number, including area code

See Ohio Admin. Code 901:3-4-02(I)

High Risk MRFEs

A High Risk MRFE creates higher potential risks due to concerns with receiving, holding, cooking, cooling, processing, handling, and heating food products.  Activities such as assembling or cooking, heating, and reheating foods are high risk activities.  A few examples of high risk activities include making kettle corn or soft serve ice cream. Most farm-based and home-produced food activities will not require the High Risk MRFE.  See Ohio Admin. Code 901:3-4-05(E)

For additional questions about the new Low Risk MRFE license, contact your local health department or the Ohio Department of Agriculture’s Food Safety Division.

Farm Office Live is this Friday, April 19

We have a packed schedule of topics for the final Farm Office Live webinar of the season this Friday, April 19 at 10 a.m. Our industry guest will be appraiser Tim Harpster, who’ll talk with us about trends in farm appraisals.  Also on the agenda are several tax topics, the popular crop input outlook, the Dairy Margin Coverage Program, transferring operating assets, and an update on the Corporate Transparency Act.  Here’s the line up:

• CAT Tax – Closing Accounts
• Taxation of Equipment Trade-ins
• 20204 Crop Input Outlook
• OSU Fertilizer Survey Release
• Dairy Margin Coverage Program
• Beginning Farmer Tax Credit Update
• Transferring Operating Assets
• Update on Beneficial Ownership Reporting under the Corporate Transparency Act
• Trends in Farm Appraisals, with industry guest and appraiser Tim Harpster

Register for the live webinar at go.osu.edu/farmofficelive, where our recordings of Farm Office Live are also available for later viewing.  This is our final webinar of the season.  After a summer break, we’ll kick off the new season at the Farm Science Review in September.

Ohio Legislative Roundup

Authored by Ellen Essman, CFAES Government Relations

The Ohio General Assembly is back in Columbus after the March 19^th primary election, and committee schedules are already filling up. Given the increased activity in recent weeks, we thought it was a good time to examine what has happened legislatively this year up until this point.

H.B. 64—Eminent Domain. This bill was first introduced by Representatives Kick (R-Loudonville) and Creech (R-West Alexandria) in February of 2023. The bill’s purpose is to make it more difficult for governmental agencies or private entities to take private property through eminent domain. On February 6, 2024, the bill was updated with a Substitute House Bill 64 in the House Civil Justice Committee.

The previous version of the bill excluded recreational trails from the definition of “public use,” meaning that property could not be taken by a government agency for recreational trails. The current version of the bill narrows this language, allowing for a taking for the purpose of creating recreational trails, but not in cases where the property is not adjacent to a public road and where the property’s primary use will be for a recreational trail.

Another substantial change between the versions involves compensation offers from the government entity to the landowner. In the original version of the bill, a government entity would not have been allowed to reduce an offer made to purchase property before proceedings commenced if the reduction was based on hard-to-discover issues with the property. The current version would exclude this provision, restoring an agency’s authority to reduce offers.

Substitute House Bill 64 would also make changes to compensation and awards landowners could receive if the issue goes to court.

H.B. 197—Solar Development. Sponsored by Representatives Hoops (R-Napoleon) and Ray (R-Wadsworth), H.B. 197 would establish a the community solar pilot program and the solar development program. Under the language of the bill, a “community solar facility” is defined as a single facility with at least three subscribers and a nameplate capacity of 10 megawatts or less, or 20 megawatts or less if on a distressed site. Furthermore, the bill would require The Public Utilities Commission of Ohio (PUCO) to establish a Community Solar Pilot Program of 250 megawatts on sites in the Appalachian region of the state. The bill would also amend the state competitive retail electric service policy to encourage community solar facilities in the state and allow subscribers to community solar facilities to receive monthly electric bill offsets.

H.B. 324—Motor Fuel. Introduced by Representatives McClain (R-Upper Sandusky) and Klopfenstein (R-Haviland) in November of 2023, H.B. 324 passed the House on February 7, 2024 and was referred to the Senate Ways and Means Committee on February 27. 

If passed, the bill would authorize a temporary, nonrefundable income or CAT tax credit of 5 cents per gallon for retail dealers who sell high-ethanol blend motor fuel containing between 15-85% ethanol. The tax credit would be limited to five years or to a total of $10 million, whichever occurs first.

H.B. 327—Employee Verification. H.B. 327, introduced by Representatives Wiggam (R-Wayne County), and Swearingen (R-Huron), had its first committee hearing in House Commerce & Labor on February 13, 2024. The bill would require political subdivisions, private employers employing 75 individuals within the state of Ohio, and nonresidential construction contractors to verify each new employee’s work eligibility through the federal E-verify program. E-Verify is an online program that helps employers verify employees’ eligibility for employment. If the bill were to pass, the employer would be required to keep a record of the verification for the duration of the employee’s employment, or three years, whichever is longer. During testimony on the bill, Representatives Wiggam and Swearingen indicated an interest in possibly lowering the employee threshold, citing Florida’s 25 employee threshold.

H.B. 347—Farming Equipment Taxes. This bill was introduced by Representative Don Jones (R-Freeport) and referred to the House Ways and Means Committee in early December of 2023. Since then, the bill has been heard in committee twice, once in January, and once in February, both times without testimony. The bill would change the way farmers claim a tax exemption on certain purchases.

Currently, when an Ohioan engaged in farming, agriculture, horticulture, or floriculture is buying a product for “agricultural use,” they must provide the seller with an exemption certificate. This certificate comes from the Ohio Department of Taxation and relieves the seller of the obligation to collect the sales tax on behalf of the state. However, the Department of Taxation can later determine that the purchase does not qualify for exemption, and then the farmer would be expected to pay the tax.

H.B. 347 would slightly alter this current way of doing things when it comes to the purchase of certain vehicles and trailers. Under the bill, the purchaser could receive an agricultural use exemption for taxes on these vehicles if the purchaser shows the seller copies of the purchaser’s Schedule F—the federal income tax profit of loss from farming form—for three most recent preceding years. Alternatively, a farmer could obtain a certificate from the Department of Taxation verifying that they have filed a Schedule F for three years in lieu of providing the forms directly to the seller. Notably, the bill states that “no other documentation or explanation shall be required by the vendor or the tax commissioner” to prove that the purchase qualifies for the agricultural use exemption.

The following vehicles and trailers would be included under the bill:

• Trailers, excluding watercraft trailers;
• Utility vehicles, (vehicles with a bed, principally for the purpose of transporting material or cargo in connection with construction, agricultural, forestry, grounds maintenance, land and garden, materials handling, or similar activities);
• All-purpose vehicles, (vehicles designed primarily for cross-country travel on land and water, or on multiple types of terrain, but excluding golf carts);
• Compact tractors (garden tractors, small utility tractors, and riding mowers).

H.B. 364—Seed Labeling; Noxious Weeds. Sponsored by Representatives Dobos (R-Columbus), and Klopfenstein (R-Haviland), H.B. 364 had its first hearing in the House Agriculture Committee on February 6, 2024.  Specifically, the bill would allow the Ohio Prairie Association and other noncommercial entities sharing seeds to distribute milkweed seeds non-commercially to i members, with the intent of promoting habitats for pollinators like monarch butterflies.

The bill would legally define “non-commercial seed sharing” as the distribution or transfer of ownership of seeds with no compensation or remuneration. Also included in the definition are a list of situations that are not considered “non-commercial seed sharing,” including when:

• The seeds are given as compensation of work or services rendered;

• The seeds are collected outside of Ohio;
• The seeds are patented, treated, or contain noxious weed species or invasive plants.

H.B. 364 also includes a definition of “seed library,” which it defines as a non-profit, governmental, or cooperative organization or association to which both of the following apply:

• It is established for the purpose of facilitating the donation, exchange, preservation, and dissemination of seeds among the seed library’s members or the general public.
• The use, exchange, transfer, or possession of seeds acquired by or from the non-profit governmental, or cooperative organization or association are obtained free of charge.

The bill would further exempt non-commercial seed sharers and seed libraries from labeling, advertising, handling, and sales restrictions under Ohio law.

To further the goal of promoting pollinators and habitats, H.B. 364 would make changes to the requirements for maintaining toll roads, railroads, or electric railways. Current law requires managers of such thoroughfares to destroy a number of noxious weeds along the roadway or in right of ways. The bill would no longer require the destruction of Russian thistle, Canadian thistle, common thistle, wild lettuce, wild mustard, wild parsnip, ragweed, milkweed, or ironweed. 

H.B. 447—Property Tax. Introduced on March 12, 2024 by Representative Loychik (R-Cortland), H.B. 447 was referred to the House Ways & Means Committee on April 2, 2024. The bill would modify and expand property tax homestead exemptions, gradually reduce school districts’ 20-mill floor for tax levies and modify the formula for determining farmland’s current agricultural use value (CAUV). The change to CAUV would involve the calculation of the overall capitalization rate for agricultural land.  Current law does not establish a minimum rate, but the bill would do so by stating that overall capitalization rate plus additur shall not be less than 10 percent.  Since a higher capitalization rate results in a lower CAUV value and because the current capitalization rate is around 8%, the change would likely lower CAUV values.

S.B. 156—Scenic Rivers. This bill, sponsored by Senators Reineke (R-Tiffin) and Hackett (R-London) passed the Ohio Senate on January 24, 2024, and was referred in the House to the Energy and Natural Resources Committee on February 6, 2024. The bill would transfer the Wild, Scenic, and Recreational Rivers Program from the Division of Parks and Watercraft to the Division of Natural Areas and Preserves (DNAP) in ODNR. The bill would narrow the scope DNAP’s authority to watercourses designated as wild, scenic, and recreational rivers. Currently, the law is written so that the regulatory agency has authority over areas. “Areas” encompass not just the water, but also the land surrounding rivers. On the other hand, “watercourses” are defined as “substantially natural channel[s] that [are] at least five miles in length with recognized banks and a bottom in which the flow or water occurs.” Thus, agency oversight would be diminished from the river and its surrounding area to just confines of the river itself.

The bill also clarifies that a watercourse designation does not affect private property rights adjacent to a designated river.

Finally, the bill would require DNAP to adopt rules for the use, visitation, and protection of scenic river lands and provide for the establishment of facilities and improvements that are necessary for their visitation, use, restoration, and protection, but do not impair their natural character.

S.B. 226—Agricultural Land. S.B. 226 was introduced by Senator Terry Johnson (R-McDermott) in late February and referred to the Veterans & Public Safety Committee on February 27, 2024. The bill would create the Ohio Property Protection Act, which would include protection of:

• Agricultural land, defined as “land suitable for use in agriculture,” including the water on the land, airspace above the land, and natural products and products from the land;
• Any land located within a twenty-five-mile radius of any installation under the jurisdiction of the United States Armed Forces;
• Any land located within a twenty-five radius of a critical infrastructure facility.

To protect property in the above categories, the bill would make it illegal for the following people and entities to acquire or purchase such property:

• Those persons and foreign adversaries listed on a registry compiled by the Ohio Secretary of State;
• A government of a foreign adversary;
• An individual who is a citizen of a foreign adversary;
• A business that is headquartered in a foreign adversary;
• A business that is directly or indirectly owned or controlled by one or more of the above persons and entities; and
• An agent, fiduciary, or trustee of the above persons and entities.

The Essential Role of Notaries

At some point, we have all had to find a notary to get a document notarized.  Ohio law requires certain documents like deeds, long-term leases and vehicle titles to be notarized.  But, have you ever thought, why do we need to have documents notarized and what are notaries?  In this article, we will discuss notaries and the important role they plan in our society.

What Does an Ohio Notary Do?

An Ohio notary is an official empowered by the state to perform various acts that add an extra layer of security and credibility to legal proceedings. Their primary duties include:

• Verifying Signatory Identity: A notary ensures that the person signing a document is who they claim to be. This involves either personally knowing the person or requesting valid government-issued photo identification and verifying its details.
• Witnessing Signature: The notary observes the signing of the document and attests to their presence during this act. Their signature and official seal serve as evidence of this witnessing.
• Administering Oaths and Affirmations: Notaries can administer oaths, which are formal declarations made under penalty of perjury, and affirmations, which are non-religious oaths. This ensures the seriousness and truthfulness of statements made during legal proceedings.
• Taking Acknowledgments: An acknowledgment is a formal statement confirming that a signer understands the content of a document and willingly signed it. The notary verifies the signer’s identity, witnesses their signature, and completes a separate acknowledgment certificate.

Why Do We Need Documents Notarized?

Notarization serves several critical purposes:

• Combating Fraud: By verifying identity and witnessing signatures, notaries help deter fraud by ensuring documents haven’t been forged or signed under duress. This adds a layer of security to important transactions, protecting individuals and organizations from potential scams and financial losses.
• Promoting Trust: A notary’s seal signifies an independent and impartial witness to the signing process. This official recognition instills confidence in the document’s authenticity, especially when dealing with parties unfamiliar with each other.
• Facilitating Legal Processes: Certain legal documents, such as deeds, powers of attorney, and sworn statements, require notarization to be considered valid in court proceedings. The notary’s presence strengthens the document’s legitimacy and streamlines the legal process.

Who Can Be an Ohio Notary?

To be a notary, a person must meet the following requirements:

• Be at least 18 years old and a legal resident of Ohio, or
• Be an attorney admitted to practice law in the state with a primary practice in Ohio.
• Have no criminal convictions.

All new notaries are required to complete a 3-hour notary class and obtain a background check.  Non-attorneys must also pass an exam. 

Conclusion

Notaries play a vital role in safeguarding the integrity of legal documents and transactions within the state of Ohio. By verifying identities, witnessing signatures, and administering oaths, they contribute to a more secure and efficient legal system. If you’re interested in a rewarding role that upholds trust and protects individuals, becoming an Ohio notary public might be a perfect fit for you.

Opportunities for agricultural attorneys and law students

I’m often asked how an attorney becomes an “agricultural attorney.”  The answer is simple: through knowledge. The best agricultural attorneys I know have two kinds of knowledge: they know agriculture, and they know the laws that affect agriculture.  There are several upcoming events that can help attorneys and law students gain the legal knowledge required to be an agricultural attorney.

The National Agricultural Law Center is currently offering two opportunities for attorneys and law students:

1. Research Fellowships for Law Students.  NALC employs law students in their second and third years as Research Fellows who help conduct legal research and writing projects. It’s an outstanding opportunity to gain research experience and access to the world of agricultural law.  As a partner of the NALC, our OSU Agricultural & Resource Law Program usually has one or two NALC Research Fellows working with us. For the upcoming term, specific research topics for NALC Research Fellows might include but are not limited to:

• Environmental regulation of agriculture;
• Food safety and food labeling;
• Agricultural finance and credit;
• Other relevant issues such as agricultural data and technology, land use, farm programs, local and regional food systems and agricultural labor;
• Legal issues of importance to underserved populations, including BIPOC, such as heirs property, access to credit, environmental law/justice and food system equity.

Interested law students must act quickly, as the fellowship applications are due April 5, 2024.  Application information is available on the National Agricultural Law Center website.

2. Agricultural & Environmental Law Conferences.  NALC is hosting two legal conferences this June:  the Mid-South Agricultural & Environmental Conference in Memphis, Tennessee on June 6-7 and the Western Agricultural & Environmental Law Conference on June 13-14.  We’ve attended the NALC conferences, and they’re excellent learning experiences that cover the breadth of topics we face in agricultural law.  The conferences also allow attendees to interact with speakers and other attorneys from around the country, and law students are welcomed.  Registration is now open for both conferences and is available on the National Agricultural Law Center website.

Two additional opportunities for agricultural attorneys and law students are on the horizon, and include:

1. The Cultivating Connections Conference.  Our program here at OSU, in partnership with Iowa State University’s Center for Agricultural Law and Taxation and the National Agricultural Law Center, is planning to host the second annual Cultivating Connections Conference for attorneys, accountants, appraisers, financial planners, and other professionals interested in farm transition planning.  We welcome law students and other young professionals to join us. The conference will be in Cincinnati, Ohio on August 4 and 5, and registration will soon be available on our Farm Office website.
2. The AALA Annual Educational Symposium.  The American Agricultural Law Association (AALA) will host its annual conference on November 7- 9 in Memphis, Tennessee.  The AALA also includes law students in its conference, and offers several activities for the students.  The AALA is currently accepting presentation proposals for the conference and registration will open later this Spring on the AALA website.

If you are or want to be in agricultural law, don’t miss out on these opportunities to gain the critical knowledge necessary to be an agricultural attorney.  Agriculture needs you!