Helping Ohio Families Address Agricultural and Natural Resource Tax Issues

David Marrison, Chris Bruynis, Barry Ward, & Larry Gearhardt

Ohio State University Extension

NRBMC - June, 2013

Background

One of the greatest risks farm families face is tax management. With the uncertainty of the fiscal cliff legislation and explosion of Marcellus Shale lease payments in Ohio, this team developed a outreach effort to help families address these new tax scenarios.

Marcellus Shale Tax

• The team offered Natural Resource (Oil & Gas Tax) updates to 1,584 tax preparers attending the OSU Income Tax Schools in 2011 & 2012.– Included a 1 hour section at each tax school.

• Conducted 25 programs on oil & gas taxation reaching 1,092 landowners from 2011-2013.– This workshops were held in various locations in

eastern Ohio.– 1 hour to 3 hour programs held.– Also held via Carmen Connect in 2013.

Marcellus Shale Tax

• The team offered Natural Resource (Oil & Gas Tax) updates to 1,584 tax preparers attending the OSU Income Tax Schools in 2011 & 2012.– Included a 1 hour section at each tax school.

• Conducted 25 programs on oil & gas taxation reaching 1,092 landowners from 2011-2013.– This workshops were held in various locations in

eastern Ohio.– 1 hour to 3 hour programs held.– Also held via Carmen Connect in 2013.

Agricultural Tax Updates

• The team has offered Agricultural Tax Update to 1,584 tax preparers attending the OSU Income Tax Schools in 2011 & 2012.– Included a 1 hour section at each tax school.

Attendees:

Attorney - (3.4%)R.T.R.P. - (37.5%)C.P.A. - (33.9%)Enrolled Agent - (10.1%)Financial Planner - (0.4%)Other - (14.9%)

Agricultural Tax Updates

• The team has coordinated an annual Agricultural Tax Issues program utilizing Dr. Phil Harris from the University of Wisconsin to teach 304 participants the latest development in farm taxes.

• The team also taught 9 farm tax programs reaching 608 farmers in 2011-2013.

Additional Outreach

• The team has 5 Tax Factsheets which were published on the Ohio Ag Manager web site (http://ohioagmanager.osu.edu)

Additional Outreach

• The team has authored 30 peer reviewed tax articles which were published on the Ohio Ag Manager web site (http://ohioagmanager.osu.edu).

Examples of Articles Written• Tax Benefits from Hiring Children in the Family Business• Separating Mineral Interests from the Surface May Result in Two Real Pr

operty Tax Bills• Depreciation, Section 179 Expensing, and Accelerated First Year Deprec

iation Deductions• Higher Gross Receipts May Require an Additional Tax to be Paid• IRS Announces Simplified Option for Claiming Home Office Deduction St

arting in 2013• IRS’s New Competency Requirements for Registered Tax Return Prepar

er’s Struck Down by U.S. District Court• Two Farm Tax Webinars to be Held• Taxpayer Relief Act of 2012- What does it mean to Ohio Farmers?• 1099 Forms for Agriculture: a 2012 Update• Tax Treatment of Income from Drought Related Livestock Sales• Get Ready to Pay More–Tax Reductions Set to Expire in 2013!• Can I Defer my 2012 Crop Insurance Check?

Additional Outreach

• In 2013, the team began offering Farm Management Webinars using Adobe Connect. Thus far, the team has offered six webinars reaching 221 persons.

• This included participants from 50% of Ohio’s 88 counties and 6 states.

• Has saved thousands of dollars in travel costs!

Webinars- 2013

• Farm Income Tax Update– January 29 & February 6 with 130 attendees

• Implications of Oil & Gas Leases– March 13 & April 12 with 45 attendees

• Getting your Financial Affairs in Order– March 27, 2013 with 22 attendees

• Return to Farm Drainage– April 9 with 24 attendees

Impact

• Typical evaluation results showed substantial increase in awareness of tax issues and tax management strategies by the participants.

• Participants reported they better understand the proper tax forms to use for the different type of income generated from their property and better understand potential tax management options.

2012 Marcellus Shale Impacts

• Biggest Impact is the understanding of the forms.

• For Marcellus Shale attendees:– 74.93% plan to meet with a tax accountant– 66.04% will meet with their lawyer– 60.96% plan to sign an oil & gas lease.– Reported mean knowledge gains between

1.74 and 2.01 on a 5 point Likert scale.

2012 Ag Issues Workshop

• 177 tax preparers attended this session at one of the 10 locations in Ohio.

• 98.55% of the attendees rated the session either very or somewhat useful and 94.41% reported they would attend a similar workshop in the future.

• 100% (n=141) of the attendees indicated the workshop improved their knowledge of agricultural tax issues; 96.21% (n=127) indicated the course would help them do a better job on agricultural taxes for their clients; and 92.31% (n=120) indicated the workshop would save their clients tax dollars on farm tax returns.

For more information

David Marrison 39 Wall StreetJefferson, Ohio 44047440-576-9008marrison.2@osu.edu