For REAP, Round 2, It’s ‘Crunch Time’

Charlene M. Shupp
Espenshade
Special Sections Editor

LANCASTER, Pa. — In January, the Pennsylvania State Conservation Commission issued the first allotment of tax credits for farm best management practices. The first round of $10 million was distributed in just a matter of 10 days. With the passage of the state budget this month, the SCC is gearing up for the second application round. To provide an update for farmers looking to apply, Mary Bender of the SCC shared a REAP update here at a recent Ag Issues Forum.

REAP, or the Resource Enhancement and Protection program, was passed as part of the 2007-2008 budget. To get the program going, Bender told the group at the Lancaster Farm and Home Center last week that the commission was on a quick learning curve to bring the program online. The new application has some changes to clarify questions and simplify the process.

Bender said 60 percent of last year’s tax credit allotment has been certified and issued. The state revenue department does not issue tax credits until the project is certified as completed.

For farmers participating in this program, Bender said it has been a “learning curve” for many. Since most conservation assistance programs have come in the form of cost share funding, or government funding paying for a percentage of the project’s costs, REAP is a different mode of assistance.

“The big thing is it comes after the project is done,” Bender said. “We have to keep reminding people to let us know when it is done so we can notify the Revenue Department.”

So far, none of the tax credits have been sold, but the first credits will be available for sale next March. She reminded farmers that if they opt to use a broker to sell the credits, there will be a service fee charged by the broker.

Also, when looking at selling the credits, she encouraged farmers to talk to financial and legal advisers to make sure they understand any tax implications from the credit sale. The Revenue Department is development is working on a general fact sheet to assist farmers and should be available in August.

The SCC made the guidelines for this year’s round of tax credits available last month and the official start date for application acceptance is Aug. 4.

Applications can be sent in postmarked on July 30. Applications sent in during that time period will be placed in order randomly. After the deadline, the applications will be placed in order received.

While the last round took 10 days to max out the tax credits, Bender predicts a much shorter timeframe because farmers have had time to prepare for this application round and farmers uncertain of the process have been able to see how the first round went.

“I think we will see those credits move quickly,” she said.

The only changes in this round from the first are the application. The SCC made adjustments to the paperwork based on repeated questions, hopefully streamlining the process for all involved. The main change she noted is how everything is organized, starting with the instructions for the application with a checklist, followed by the application and then the application for sale of tax credits.

“Generally everything that was eligible last year is eligible this year,” she said.

For this round, Bender said more work is being done on the sponsorship provision for REAP credits.

With deadline looming, Bender said if a farmer has not started the application process, they need to get started immediately. Now is “crunch time,” she said.