[Federal Register: June 24, 2005 (Volume 70, Number 121)]
[Notices]
[Page 36557]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24jn05-37]
========================================================================
Notices
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains documents other than rules
or proposed rules that are applicable to the public. Notices of hearings
and investigations, committee meetings, agency decisions and rulings,
delegations of authority, filing of petitions and applications and agency
statements of organization and functions are examples of documents
appearing in this section.
========================================================================
[[Page 36557]]
DEPARTMENT OF AGRICULTURE
Conservation Security Program; Primary Purpose Determination To
Exclude Program Payments From Gross Income Under Section 126 of the
Internal Revenue Code
AGENCY: Office of the Secretary, USDA.
ACTION: Notice of determination.
-----------------------------------------------------------------------
SUMMARY: The Secretary of Agriculture has determined that existing
practice, new practice, and enhancement activity payments made to
producers under the Conservation Security Program (CSP), authorized
under the provision of Title II, Subtitle A, Section 2001 of the Farm
Security and Rural Investment Act of 2002 (Pub. Law 107-171), are made
primarily for the purpose of conserving soil and water resources,
protecting or restoring the environment, and providing a habitat for
wildlife. This determination is in accordance with Section 126 of the
Internal Revenue Code of 1954, as amended. Subject to a finding by the
Secretary of the Treasury that the program is a small watershed program
administered by the Secretary of Agriculture substantially similar to
the type of programs described in 26 U.S.C. 126(a)(1) through (8), this
determination permits recipients to exclude from gross income, for
Federal income tax purposes, all or part of the existing practice, new
practice, and enhancement activity cost-share payments made under said
program to the extent allowed by the Internal Revenue Service.
FOR FURTHER INFORMATION CONTACT: Craig Derickson, Program Manager,
Conservation Security Program, Natural Resources Conservation Service,
USDA, Box 2890, Washington, DC 20013; (202) 720-3524.
SUPPLEMENTARY INFORMATION: Section 126 of the Internal Revenue Code of
1954, as amended, 26 U.S.C. 126, provides that part or all of certain
payments made to persons under certain small watershed programs
administered by the Secretary of Agriculture, which are determined by
the Secretary of the Treasury to be substantially similar to the type
of programs described in 26 U.S.C. 126(a)(1) and (8), may be excluded
from the recipient's gross income for Federal income tax purposes if
certain determinations are made. One such determination is made by the
Secretary of Agriculture that program payments are made ``primarily for
the purpose of conserving soil and water resources, protecting or
restoring the environment, improving forests, or providing a habitat
for wildlife.'' To make such a ``primary purpose'' determination, the
Secretary evaluates conservation program payments based on criteria set
forth at 7 CFR Part 14. Following a primary purpose determination by
the Secretary of Agriculture, the Secretary of the Treasury must
determine, during individual audits, that payments made under the
conservation program do not substantially increase the annual income
derived from the property benefited by the payments.
CSP supports ongoing conservation stewardship of agricultural lands
by providing assistance to producers to maintain and enhance natural
resources. CSP will help producers maintain conservation stewardship
and implement additional conservation practices that provide added
environmental enhancement.
Under CSP program, the Secretary is authorized to make payments to
the participant for the Federal share in accordance with subsection
(C)ii, for not more than 75 percent (or in the case of a beginning
farmer or rancher, 90 percent) of the average county costs of practices
for the 2001 crop year that are included in the conservation security
contract, as determined by the Secretary, including the costs of (I)
the adoption of new management, vegetative, and land-based structural
practices; (II) the maintenance of existing land management and
vegetative practices; and (III) the maintenance of existing land-based
structural practices that are approved by the Secretary but not already
covered by a Federal or State maintenance requirement.
In implementing the program, the Natural Resources Conservation
Service, on behalf of the Commodity Credit Corporation (CCC), will
allocate resources locally, as appropriate for the agriculture
operation, to address significant resource concerns, meet the
appropriate nondegradation standard, and to implement or maintain
vegetative, active land management, and structural conservation
practices included in the plan. Participants will enter into cost share
contracts with the CCC for 5 to 10 years, under which the CCC and the
participants will share the cost of installing new conservation
practices and activities at a Federal rate not to exceed 75 percent or
as a flat rate, as appropriate.
Having carefully examined the authorizing legislation, and planned
operating procedures for CSP, using the criteria set forth at 7 CFR
Part 14, we concluded that the payments for implementing approved
contract practices under this program are made primarily for the
purpose of conserving soil and water resources, protecting and
restoring the environment, and providing a habitat for wildlife.
Determination: As provided by Section 126(b) of the Internal
Revenue Code, the authorizing legislation, and planned operating
procedures regarding CSP have been examined in accordance with criteria
set out at 7 CFR Part 14. Based on this examination, we determined that
those payments made for planning, installing, and maintaining approved
practices under this program are primarily for the purpose of
conserving soil and water resources or protecting and restoring the
environment.
Subject to a finding by the Secretary of the Treasury that the
program is a small watershed program administered by the Secretary of
Agriculture substantially similar to the type of programs described in
26 U.S.C. 126(a)(1) through (8), this determination permits recipients
to exclude from gross income, for Federal income tax purposes, all or
part of the existing practice, new practice, and enhancement activity
payments under the extent allowed by the Internal Revenue Service.
Signed in Washington, DC on June 14, 2005
Mike Johanns,
Secretary of Agriculture.
[FR Doc. 05-12516 Filed 6-23-05; 8:45 am]
BILLING CODE 3410-16-M