|An Overview of the N.H. Timber Tax
By Dennis Thorell
Under RSA 79:2, growing wood and timber is not subject to the property tax in New Hampshire, although the land on which the wood is growing is subject to taxation. The wood and timber is assessed, however, at a stumpage value determined at the time of the cutting. Stumpage value is defined by statute as "the amount determined by the assessing officials in the same manner as other property values for the purpose of taxation at the time of the timber cut."
RSA 79:10 requires every owner intending to cut wood or timber to file with the assessing officials of their municipality at the beginning of each year and prior to starting any cutting operations, a notice of intent to cut. Supplemental notices must be filed for any additional volume not originally estimated. Assessing officials must notify the tax collector within 30 days of approving the intent to cut, and forward copies of the intent to the DRA. The DRA will then furnish a certificate and report of wood cut form to the owner of the property. The certificate must be posted within the area of the cutting operation. The DRA will also forward a copy of all intents to the Division of Forests and Lands of the Department of Resources and Economic Development.
Every owner who has filed an intent to cut must file a report of all wood and timber cut to the local assessing officials, and the DRA within 60 days of completion of the operation. The DRA will then send a copy to the Division of Forests and Lands of the Department of Resources and Economic Development. All reports of wood and timber cut through March 31st of any year must be filed no later than May 15th.
A yield tax at the rate of 10% of the stumpage value is to be assessed by assessing officials within 30 days of a report of a wood or timber cut. Assessing officials must take into account the location of the timber, the quality of the timber, the size of the sale, and any other factors necessary to harvest the wood or timber that affects its value.
When assessing the value of wood or timber, the following factors should be considered in light of the above requirements:
- Value is based on the most probable price that would be paid, not the average, highest, or lowest price.
- Value recognizes both the highest and best use of the wood and timber.
- Value is expressed in terms of money.
- Value recognizes that the timber was exposed for sale to the open market for a reasonable time.
- Value recognizes that both the buyer and seller are informed of the uses to which the wood and timber may be used.
- Value assumes an arm's length transaction in the open market; in other words, there is no special relationship or collusion between the buyer and seller.
- Value assumes a willing buyer and willing seller, with no advantage being taken by either party.
Assessing officials should also take into account the costs incurred by owners for access and removal, but only those that are necessary and reasonable. Furthermore, some of these costs should be prorated over the entire volume of wood that would benefit from those costs. Costs created by constraints within a timber sale contract that limit operations beyond Federal, State, and local requirements, and which are not necessary, cannot be charged against the operation.
If an owner neglects or fails to file a report of cut, or willfully makes any false statement in a notice of intent to cut or report of cut, the assessing officials must determine the volume and stumpage value of the wood and timber actually cut, and assess the owner twice as much as the assessment would have been had the report of cuts been reported correctly.
An owner may appeal his yield tax within 90 days of the notice of the tax from the municipality. If the local assessing officials neglect or refuse to grant an abatement within six (6) months, the owner can petition the Board of Tax and Land Appeals (BTLA) or the superior court of the county where the cutting took place. The BTLA may on its own motion, or that of the owner or municipality, call the DRA or Division of Forest and Lands, Department of Resources and Economic Development, to provide expert testimony at no cost to the appellant.
Dennis Thorell is the state Timber Tax Appraiser and has fourteen years experience in that position.
Volume 1, Issue 3