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Welcome
to the new home of agricultural
credit
Agricultural Fuel Credit -
Farmers and ranchers may claim a refundable tax credit
on their tax returns for tax paid for gasoline and undyed
diesel fuel used exclusively for commercial, non highway
agricultural use.
The State Tax Commission has ruled this credit is limited
to gasoline or undyed diesel fuel used in stationary or
self-propelled farm machinery used solely for nonhighway
(not on public roads) agricultural purposes. The 2006
state gasoline and diesel fuel taxes were 24.5 cents per
gallon.
The refundable tax credit is limited to those involved
in commercial farming activities:
- producing agricultural crops for resale
- raising livestock and other animals useful to man,
or
- performing custom agricultural work using nonhighway
farm equipment
- Activities that do not qualify for this credit include,
but are not limited to, the following: golf courses,
horse racing, boat operations, highway seeding, vehicles
registered for highway use, hobbies, farming for personal
use, etc.
Credit is not allowed for purchases of dyed diesel fuel
(dyed diesel fuel purchases are exempt from fuel tax),
nor for fuel used in any vehicle registered for highway
use.
Attach federal Form 1040 Schedule F or K-1 to support
the credit claimed. There is no state form for this credit.
Keep all personal records, forms and worksheets to support
this credit. The Tax Commission advises agricultural operators
to keep legible copies of purchase invoices, receipts,
etc., to substantiate the tax credits. The receipts should
show:
- The name and address of the taxpayer;
- The number of gallons and type of motor fuel;
- Where the fuel was purchased; and,
- The date and amount of the purchase.
- Canceled checks do not meet the above criteria to
adequately substantiate off-highway fuel purchases.
For purposes of the Beginning Farmer Tax Credit Act
Agricultural assets means agricultural land, livestock,
farming, or livestock production facilities or buildings
and machinery used for farming or livestock production
Farm means any tract of land over ten acres in area used
for or devoted to the commercial production of farm products;
Farm product means those plants and animals useful to
man and includes, but is not limited to, forages and sod
crops, grains and feed crops, dairy and dairy products,
poultry and poultry products, livestock, including breeding
and grazing livestock, fruits, and vegetables;
Farming or livestock production means the active use,
management, and operation of real and personal property
for the production of a farm product;
Financial management program means a program for beginning
farmers or livestock producers which includes, but is
not limited to, assistance in the creation and proper
use of record-keeping systems, periodic private consultations
with licensed financial management personnel, year-end
monthly cash flow analysis, and detailed enterprise analysis.
Agricultural Credit Insurance Fund - Guaranteed Loans
Assessment
The program allows family farmers who could not otherwise
obtain agricultural credit to obtain needed credit from
private.
FSA's guaranteed farm loans help to resolve imperfections
in credit markets as well as help address concerns regarding
social equity. Due to the economic uncertainty concerning
the production of agricultural commodities, farmers may
have difficulty demonstrating their creditworthiness to
lenders. This problem is likely to be more serious for
young/beginning farmers due to lack of credit history
or limited income. Much farm production occurs in geographically
isolated areas that have few lenders. Consequently, farmers
may face a competitively limited market for their loans
that can result in higher rates, unfavorable terms, and
a shortage of loan funds. By limiting the lenders' risk,
FSA guarantees enable lenders to become more comfortable
lending to farmers, facilitating the provision of credit,
which can help support low farm family incomes, assist
beginning farmers, or help farmers adopt new technology
that will make their farming operations more economical.
At the Federal level there are no other agencies that
have the same specific goals and objectives as FSA guaranteed
loan programs. While the Small Business Administration
(SBA) also has a loan program for the farm sector, much
of SBA's loans to farmers are to provide capital for farm-related
businesses which FSA cannot finance. Although there are
several State Governments that have established programs
with goals and objectives similar to the FSA guaranteed
loan program, there is no such program that is national
in scope.
The program is comparatively very cost-effective with
low subsidy costs and the delivery mechanism is consistent
with program objectives. Due to the economic uncertainty
with production agriculture, many farmers suffering financial
difficulty would be unable to obtain necessary credit
without a guarantee. We have no evidence of any other
approach or mechanism that would be more effective. The
program is designed to partner with the private sector
to use existing lender procedures to reduce costs and
minimize administrative burden.
While lenders are not asked to specifically commit to
meeting Agency goals, they do share the Agency mission
of providing credit and improving the financial viability
of farmers and ranchers. They also receive incentives
from their regulatory agencies to make loans to our targeted
farmers. Rather than have lenders report goal activity,
the Agency monitors lender performance through regular
review of data received from the lenders and credit agencies.
Non-performance by lenders results in loss of status and/or
increased oversight. To insure credit is provided to targeted
groups, the Agency reserves loan funds and includes field
office goals to measure performance. In addition, outreach
efforts include meetings with lenders and lending associations
to discuss the importance of policy.
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