Did land placed in the federal Conservation Reserve Program still qualify as agricultural real property for South Carolina's reduced property-tax assessment?

Plain-English summary

South Carolina Revenue Ruling 87-9 addressed whether land enrolled in the federal Conservation Reserve Program (CRP) should be classified as agricultural for property-tax purposes. Under Section 12-43-220(d), agricultural real property receives a reduced assessment, and "rollback taxes" are assessed if the land is later put to a non-agricultural use. Regulation 117-114 defines agricultural real property, lists factors assessors weigh, and states that vacant or dormant land does not qualify.

The CRP pays farmers to take erodible land out of annual crop production for a 10-to-15-year period and instead plant perennial grass, wildlife plantings, windbreaks, or trees, without reaping commercial benefits such as haying, grazing, or seed or tree production during the contract.

The Commission recognized the tension: idle land normally fails the test, but the CRP requires active planting that serves a strong public purpose — controlling the critical soil erosion affecting much of the nation's cropland. To further that purpose, it ruled that Section 12-43-220(d) should be construed to include land legitimately removed from production under the CRP (16 U.S.C. §§ 3831 and 3832) as agricultural property eligible for the reduced assessment. Assessors should still look to the Regulation 117-114 factors, which are a guide rather than an exclusive list, and weigh all relevant facts.

Common questions

Q: Does idle land in the Conservation Reserve Program qualify as agricultural? Yes. The ruling treated properly enrolled CRP land as agricultural for the reduced assessment.

Q: Doesn't dormant or vacant land normally fail the test? Yes, but the Commission made an exception because the CRP requires planting and serves the public purpose of preventing soil erosion.

Q: What should assessors consider? The factors in Regulation 117-114, used as a guide, along with all other relevant facts about the tract.

Q: What happens if the land later leaves agricultural use? Section 12-43-220(d) provides for rollback taxes when property is applied to a non-agricultural use.

Citations and references

• S.C. Code Ann. § 12-43-220(d) (agricultural reduced assessment and rollback taxes)
• S.C. Regulation 117-114 (definition and factors for agricultural real property)
• 16 U.S.C. §§ 3831 and 3832 (federal Conservation Reserve Program)

Subject

Ad Valorem (Property) Tax Designation of Land as Agricultural Use

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR87-9.pdf

Original ruling text

SC REVENUE RULING #87-9
SUBJECT:

Ad Valorem (Property) Tax Designation of Land as Agricultural Use

EFFECTIVE DATE:

November 4, 1987

SUPERSEDES:

All previous documents and any oral directives in conflict herewith.

REFERENCE:

S.C. Code Ann. Section 12-43-220(d) (Supp. 1986)
Regulation 117-114

AUTHORITY:

S.C. Code Ann. Section 12-3-170 (1976)
SC Revenue Procedure #87-3

SCOPE:

A Revenue Ruling is the Commission's official interpretation of how
tax law is to be applied to a specific set of facts. A Revenue Ruling is
public information and remains a permanent document until
superseded by a Regulation or is rescinded by a subsequent Revenue
Ruling.

Question:
Should land lying fallow pursuant to the Federal Conservation Reserve Program of the
Agricultural Stabilization and Conservation Service be classified as agricultural land by the tax
assessor's office?
Facts:
Certain federal programs may appear to conflict with the tax assessor's designation of land as
agricultural or nonagricultural. The Agricultural Stabilization and Conservation Service has a
federally sponsored program that pays farmers to take their land out of production primarily to
prevent soil erosion. Farmers, under the program contract with the USDA for a 10 to 15 year
period whereby they agree to take eligible land out of annual crop production and put it into
perennial grass, wildlife plantings, windbreaks or trees. Payments to individual producers may
not exceed $50,000 per year, exclusive of other USDA payments. To ease the possible effect on
agriculture-related industries or businesses, not more than 25 percent of the land in any county
can be bid into the program except where the secretary determines the economic impact would
be minimal. During the contract period, farmers may not reap commercial benefits from reserve
land through haying, grazing, or seed or tree production.

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Discussion:
Section 12-43-220(d) provides a reduced assessment for property which is in agricultural use. If
the property is applied to a use other than agricultural, additional taxes known as "rollback taxes"
will be assessed.
The definition of agricultural real property is found in Regulation 117-114.
"Agricultural real property ... means a tract of real property which is used for agricultural
purposes. Real property is used for agricultural purposes when it is used by the producer
to raise, harvest, or store crops, to feed, breed, or manage livestock, or to produce plants,
trees, fowl or animals useful to man... Real property is not used for agricultural purposes
unless the owner of or lessee thereof has, in good faith, committed the property to that
use ...."
The regulation also lists the following factors to be considered by county assessors in determining
whether the tract in question is bona fide agricultural real property:
1.
2.
3.
4.
5.

The nature of the terrain.
The density of the marketable product on the land.
The past usage of the land.
The economic merchantability of the agriculturalproduct.
The use or not of recognized care, cultivation, harvesting and like practices applicable
to the product involved and any implemented plans thereof.

6. The business or occupation of the landowner or lessee, however, the fact that the tract
   may have been purchased for investment purposes does not disqualify it if actually
   used for agricultural purposes.
   In addition, this regulation states vacant land (land lying dormant) does not qualify as
   agricultural.
   It is obvious that the statute and regulation as a whole are designed to insure that real property
   accorded the benefit of a lower assessment actually be agricultural property. The Conservation
   Reserve program requires participating farmers to plant perennial grass, wildlife plantings,
   windbreaks or trees. Agricultural uses specifically enumerated in Regulation 117-114 are
   property used for grazing of animals, horticulture, forestry, dairying, and mariculture.
   The public purpose served by the Federal Conservation Reserve program is to control the critical
   soil erosion now occurring on more than a third of America's cropland. Unchecked, soil erosion
   would reduce the nation's long-term capability to produce food and fiber. Thus, to further this
   purpose property which has legitimately been removed from production pursuant to the
   Conservation Reserve program (16 U.S.C., Sections 3831 and 3832) should be designated
   agricultural property for purposes of the reduced assessment afforded by Section 12-43-220(d).
   County Assessors should look to the factors specified in Regulation 117-114 as a guide. The
   regulation states "these factors are not, however, meant to be exclusive and all relevant facts
   must be considered."

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Conclusion:
In promotion of the public policy of preventing soil erosion, Section 12-43-220(d) should be
construed to include agricultural property taken out of production pursuant to 16 U.S.C.,
Sections 3831 and 3832.

SOUTH CAROLINA TAX COMMISSION

s/S. Hunter Howard, Jr.
S. Hunter Howard, Jr., Chairman

s/John M. Rucker
John M. Rucker, Commissioner

s/A. Crawford Clarkson, Jr.
A. Crawford Clarkson, Jr., Commissioner
Columbia, South Carolina
November 4
. 19 87

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