REAP: 10 Things Every PA Farmer Should Know

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Here are some key highlights of the Resource Enhancement and Protection (REAP) tax credit program.

• Dollar for Dollar Reduction: REAP Provides a Dollar for Dollar Reduction in PA income or corporate tax. Farmers can earn these tax credits after completing eligible projects or purchasing eligible equipment on or after October 23, 2007.
  
• Use or Sell the Tax Credits: Farmers can use REAP tax credits to offset state taxes for up to fifteen years. Alternatively, after one year, farmers can sell tax credits to another taxpayer, typically at about a 10% discount. Brokers can help arrange sales. However, please note that the original recipient must first use the credit to offset tax obligations for the year in which the tax credit is awarded. The balance may then be sold to a second party.
  
• Eligibility: Farmers throughout Pennsylvania are eligible to apply. A current conservation plan that meets state erosion control regulations is required. Concentrated animal operations must additionally have a nutrient management plan. If neither is yet completed, REAP enables farmers to recover 75% of the cost to develop these plans.
  
• Earning Credits: Businesses can earn REAP tax credits by sponsoring farm projects. If a business contributes money toward a farm conservation project up front, that business can then apply for the REAP tax credits instead of the farmer.
  
• Improving Animal Concentration Areas: An “animal concentration area,” or ACA, is an outdoor area on a farm where livestock congregate. To be eligible for REAP, an agricultural operation must control runoff from these areas, or the implementation of ACA improvements must be included in the application for a tax credit.
  
• $150,000 Per Farm: Each eligible farm may receive up to $150,000 in credits. This is a lifetime limit that may be used all at once, or for multiple projects. Sole proprietorships, partnerships and corporations are eligible.
  
• REAP Works With Other Programs: A farmer who receives government funds for conservation projects may be able to earn tax credits for a portion of those project costs that have been paid by the farmer.
  
• Eligible Practices: Farmers can earn tax credits worth 50-75% of total project costs. The tax credit is awarded after the project is completed or equipment is purchased. Eligible practices include: development of conservation and nutrient management plans, barnyard improvements, intensive grazing systems, manure handling and storage systems, alternative uses of manure, new and used no-till planting equipment, cropland conservation practices, and other practices.
  
• Plan Ahead: Farmers should visit their local County Conservation District, Natural Resource and Conservation Service (NRCS) office, or qualified technical service provider to evaluate the status of their conservation plan and if applicable, nutrient management plan. They should also discuss the program with their tax advisor.
  
• Get More Details: REAP is overseen by the State Conservation Commission. For more information, visit their REAP website at http://bit.ly/dBXkXQ.