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IRS Update
In an effort to ensure the appropriate income tax is being paid on timber sale income, the Internal Revenue Service (IRS) will be conducting income tax audits for individuals that reported timber sale income on either a Schedule C or D in 2006. This special emphasis program initially consists of 50 taxpayers that sold between 100-250 acres of timber. If problems with the selected returns are discovered, the audit will be expanded. As part of this program, the buyers of the timber will also be contacted on a follow-up basis. The IRS has developed Audit Techniques Guides (ATGs) that can offer information on tax returns that include timber income. Click here for an ATG for the Hardwood Timber Industry.
Severance Tax-"Timber Industry Facing Big Hit" - MetroNews Talkline - Charleston
As the legislation aimed at shoring up the workers' comp takes shape, the state's forest industry is running up a red flag.
The final draft of the proposal submitted to lawmakers by the Manchin Administration calls for the state's wood products industry to increase its timber severance tax from 3.22% to 6%. Dick Waybright says that amounts to an 86-percent tax hike on the forest industry, a hike he's not pleased with.
"What other industry in the state is willing to take an 86 percent increase in their taxes and only get a 15-percent payback on your workers' comp." Said Waybright during an appearance on MetroNews Talkline Monday.
The general consensus from other extraction industries has been they are willing to live with the increased severance fees with the payoff of a lowering of their workers comp rates. However, Waybright says timber doesn't enjoy that clean of a trade. Many in the timber industry who will benefit from the lower workers comp rates are not the ones who'll bare the brunt of the severance tax hike.
"Most of the forest industry that will end up paying the tax is small business and we thought that was something the governor was not in favor of was hurting small business."
Waybright adds that in addition to small timber operators who'll get hit, landowners will suffer a devaluing of their stands of timber as well.
"This will be a savings for some in the forest industry because of the workers comp reduction, but eventually the trickle down effect will be the landowners will receive less for their timber because the people buying that timber have to figure this tax in."
Waybright says they are hoping to meet with the Manchin Administration and leading lawmakers to find a solution that will ease the burden on loggers and forest products companies. He says they are willing to absorb some of the burden to help fix workers' comp, but believes this amount is excessive.
Click here for frequently asked questions regarding the Timber Severance Tax