# IRS eyes CRP



## Trophy Specialist (Nov 30, 2001)

For those that do not know, self employment tax is for Social Security. When you work for someone, your employer pays for half of your Soc. Sec. payments. When you are self employed, you pay it all yourself. So, technically, the self employment tax is not a tax at all. It is well known that SS will go broke in the not-so-distant future, unless they can shore it up. You can bet that you'll be seeing more "creative" ways to incerase Soc. Sec. income.

Are CRP papments added to revenue for farm income? If so wouldn't any profits then include CRP payments and thus be subject to Self Employment tax?


----------



## 30pointer (Dec 22, 2005)

The way the law is now you have to pay the tax if: "the participants were otherwise operating a farm or materially participating in the production of commodities on a farm operated by others". You don't have to pay tax if: "they do not operate a
farm or materially participate in farming activities"

If they move forward with the new ruling everyone would have to pay the tax. The IRS supports this arguement by saying the government is paying you to perform conservation related activities as apposed to the goverment renting the land from you. I think it is a silly arguement since most farmers see it as the government renting their land since little work needs to be done on these properties after the first year.

Many people in CRP like my Dad (120 acres) own property as an investment and do not consider it a job.​


----------



## CaptChaos (Dec 31, 2005)

So then it IS welfare! But for the rich!

Have more kids; get more gov. bux.............buy more property; get more gov. bux!

IMO the only folks that should possibly qualify are farmers who forgo an income from their cash crop......and only then if it benefits the public who fund it by bordering State or Federal land; or if the landowner allows public hunting.

And any way you look at it, If you make money, it is income,......pay your taxes like everyone else, please?


FIRE AWAY>>>>I"M DUCKING!!!!!:corkysm55


----------



## Rudi's Dad (May 4, 2004)

I inherited a farm, of which 40 acres was eleigible for CRP. I asked the questions, and got in the program for a whopping $33 and acre. Plus I HAVE to plant a 2 acre annual foodplot. It cost me over $2000 to conform to the USDA requirements and have the habitat planted on just 40 acres. 
This summer I was eligible to extend my contract 4 years (2014), no changes. I took the offer. Now the IRS wants to change the rules in the middle of my contract. What a rip off if that happens. 
FYI, to get out of the CRP Contract, farmers would have to pay back ALL the money to day ONE. 
I wrote to my Senators, IRS and Congressman regarding IRS Notice 2006-108. You may e-mail IRS [email protected]
If this passes, CRP will probably go away as contracts expire.


----------



## johnhunter (Jun 17, 2000)

CaptChaos said:


> IMO the only folks that should possibly qualify are farmers who forgo an income from their cash crop
> 
> FIRE AWAY>>>>I"M DUCKING!!!!!


Well, you'd better duck, because you illustrated that you were too lazy to read the other posts. EVERYONE who gets a CRP contract forfeits income from other sources on their land, whether or not they actively engage in agricultural activities themselves or not. From a public policy perspective, it is irrelevant whether the landowner leases cropland to another or if he farms it himself. 

Not sure if you realize this, but in many ag areas, MOST agricultural acreage is not owned by the individual who actively farms it. To preclude landowners who lease out their farmland from enrolling acreage in CRP would easily cut the quantity of CRP acreage, nationally, (currently roughly 36 million acres) in half or more. As mentioned previously, before you pop off about "welfare", you may wish to take the trouble to get the perspective of PF/DU/QU (forgot to mention NRCS and USFWS) for the devastating impact this would have on upland game and ecosystems. 



CaptChaos said:


> So then it IS welfare! But for the rich!


 
You couched your remark here in the form of a conclusion. However, if you read this thread, your comment is anything but Aristotelean (for those from Rio Linda, that means there's not a syllogism here).

And again, just exactly like farm rental income, CRP income _has always been subject to income tax,_ and exempt from payroll taxes. Making the IRS's change would make it far more lucrative for landowners to stay away from CRP.



CaptChaos said:


> Except ALL people have the right to harvest the fish that are put there from the hatcheries and stocking programs.
> Aaaaannd the stocking programs are funded by licenses of sportfisherman and the charter fleet as well. Not from taxes on the general public.
> ANNDD...
> If a private lake recieves stocking through DNR efforts and fishstocks, the lake is made accessible to the general public.


Finally, you cannot compare CRP to fish stocking. The programs have completely different objectives - fish stocking is done for the purpose of improving sport fishing for the public. CRP is a broad-based conservation program aimed at reducing soil erosion, making watersheds cleaner, enhancing wildlife habitat, and preserving fragile ecosystems.


----------



## CaptChaos (Dec 31, 2005)

> Well, you'd better duck, because you illustrated that you were too lazy to read the other posts. EVERYONE who gets a CRP contract forfeits income from other sources on their land, whether or not they actively engage in agricultural activities themselves or not. From a public policy perspective, it is irrelevant whether the landowner leases cropland to another or if he farms it himself.


No I wasn't too lazy to read all the posts, just to lazy to go back and fix what I wrote. For that I guess I'm guilty.
However it is protection of upland game and ecosystems that have been negatively impacted by farming the land. So why pay the farmer/landowner to fix it? 

Second, if it is paid for by tax dollars, the taxpayers should reap the benefits too, not only the landowner. To help upland birds and wildlife on public use lands with tax dollars is a worthy cause. We all win. To pay tax dollars for use on private lands without public access is wrong in my opinion. 

It's welfare to the haves'. Government Pork. Free cheese to go with your whine!

And before you call me lazy or accuse me of comparing CRP to fish stockings, perhaps you should get off your lazy butt, and read back to ONE EYE's post:


> No, but there is a current program called "fish stocking" and "hatcheries" that actually supply many of the fish that you charter for. Perhaps you have heard of it? There are all kinds of government "pork" out there that could be reviewed and determine whether they are "needed". Be careful waht you wish for.


I was only responding to such a ridiculous comparison. We fisherman must pay for the fishery we have....and we all apparently pay for the you have too! When I compared CRP to chartering it was only in reference that perhaps I should be given a stipend to not take charters in order to save the Great Lakes Fishery, but at the same time be able to use my charter for my personal use. 

The ecosystem of the Great Lakes are just as fragile as upland game. Our waters have been in decline for years while our government turns a blind eye and refuses to put out monies to avoid the collapse of a resource that is available to all. So why do they pay for a resource only available to the few?

JMO


----------



## wruebs (Nov 18, 2003)

So why do they pay for a resource only available to the few? 

CaptChaos, I don't see how the government (taxpayers) are paying for a resource for a select few. The government's intent is NOT to pay someone to enchance their land for their personal enjoyment (hunting). Sure it improves the hunting because of the conservation practices make it more appealling to wildlife. But the government's intent is to improve the ecosystem as farmlegend describes. WE ALL benefit through that with controlled herbicide, pesticide and phosphorous runoff to keep our watershed cleaner for example. You as a charter operator benefit from that. 

You say the public should have access to CRP enrolled lands, think about that. Here the government is paying for environmental improvement and if they were to allow public access, well look how the public access improves the environment on state lands. Dumping garbage, ripping up the terrain, cutting/stealing trees, etc. The government (USDA) knows that making public access would be counterproductive to the intent of the CRP program. Although in some cases the USDA does give a bonus for a program with limited public access, the landowner is still held to the contract (maintaining the deemed practices as described in the language of the contract). 

Also if mandatory access was required, that would significantly cut down on the acreage enrolled because landowners would not want deal with it. 

I think you should go to your local FSA office and get some booklets that describe CRP and it's benefits. I know you are looking to spar on this subject, but if you knew more about it, you probably would change your envious bias.

And what you said about perhaps abolishing farming to clean/ fix the ecosystem, you really don't want that do you?


----------



## CaptChaos (Dec 31, 2005)

Wrebs,
I never, ever said anything about abolishing farming. I did question paying the folks who screwed it up to fix it again. I am sure that it does serve a beneficial purpose on the ecology or there wouldn't be any reason all to justify the project in the first place. 
However I don't believe that the reason to not force public use has to do as much with negative impact on the properties as much as the projected refusal of landowners to enroll if implemented. If that were the case it would seem that the government would treat the affected acreage more as a wetland project (after restoration) and restrict use to low/no impact to even the landowner.
In one of my previous posts you will see that I do think it is a good idea to pay for restoration when in close proximity or adjoining public use lands as all will benefit from a use standpoint. If it is only to fix damage done, let the evildoers pay the tab themselves. Even FORCE them to, just as is done to industrial corporations. If the damage was done prior to ownership, well, the new owner should have known better, just like industrial properties. As it stands it is a "have your cake and eat it too" policy.

I do have to say that it is nice to read your posts as they are very informative and provide an eloquent response to the topic. They do make one(me) want to look into the issue further and also force me to leave room for debate in my own judgement. Well done sir, well done.

However I have another question that is actually more on the original topic line concerning the self employment tax being levied on the income from CRP. Why are folks complaining that the left hand of the govenment may take some of the free(almost) money given to them by the right hand? My conclusions about it being like welfare are indeed justified. While not completely free, it is close and even welfare recipients must do some footwork to be paid. If the government decides to add more tax to the money, so be it. Just like welfare, the person can make the choice to get off the government handout and work if it's not enough. 
And as we all know, going to work and creating an income costs dollars. Protecting the property being adversely affected to gain a profit should be considered overhead. 
Just my .02. 
I love America.


----------



## Trophy Specialist (Nov 30, 2001)

I wonder if an expansion of the CRP program would fix all that muddy water runoff that makes Lake Erie look like mud-soup, thus making the walleye fishing there better?:lol:


----------



## wruebs (Nov 18, 2003)

CaptChaos,
I really can't speak for everyone in CRP as to the nature of their disdain for this IRS proposal. But, of course, no one really likes uncle sam reaching for more of the money that they see coming to them. My complaint is that they are changing the rules in the middle of the game. Take your welfare example; I agree that if they don't like the modification to their net compensation, they can go to work, give it up, or whatever. In my case, I'm locked in for another 10 years contractually. If I don't like it, I could pay back every dollar (rent and practice establishment) that the USDA has payed me thus far to void the contract. The result would be that I give up 5 years of return on my asset, something that I can't get back and I don't think that is fair. It's all about getting a return on an asset. I had a choice of renting to a farmer for crop production, selling it, or enrolling in CRP. After pushing the pencil I decided on CRP, looking at a 15 yr. period. CREP is the form of CRP that I enrolled in. This includes establishing filter strips, shallow water buffers and windbreaks (planting and maintaining trees). I underestimated the work involved, but that's on me. But the monetary return is something that I feel I shouldn't have to take a hit on.

Perhaps as an existing contract holder I can be grandfathered in? 

Also, I don't see CRP as free/easy money because I could have been collecting rent (and saving myself some work) if it were not for the contract. If I had a choice, providing the IRS does declare it SE income, to have the contract terminated in lieu of this proposal, I would feel better about it.

BTW, does anyone know if the IRS has finalized this proposal?


----------



## 30pointer (Dec 22, 2005)

From above

"Second, if it is paid for by tax dollars, the taxpayers should reap the benefits too, not only the landowner ... To pay tax dollars for use on private lands without public access is wrong in my opinion."

Capt Caos, lets assume you own a house. You receive a government subsidy when you claim your mortgage interest and property taxes as a tax deduction. The deduction is a tax subsidy that costs the rest of the taxpayers money. Should receiving a subsidy on your home ownership give me the right to come and camp out in your yard?

I see it as a fairness question. Investments are taxed differently than employment. Are CRP payments a job or not?


----------



## November Sunrise (Jan 12, 2006)

uptracker said:


> Is there always a self-employment tax of 15.3% on anybody self employed? Anybody have experience with it. Is there a code or law I can look into with this?


12.4% is for social security - there's a cap that jumps $3-$4K every year - this year the cap is $97,500 - any earnings above $97,500 (for self employed and employees alike) are exempt from social security taxes. Many people predict that the the maximum earnings cap for social security will be eliminated in the future. 

2.9% is for Medicare - there is no maximum earnings cap for Medicare taxes.


----------

