ST. LOUIS - Owners of farmland who sell their property for development will have more time to re-invest in farmland to avoid capital gains taxes under a new Illinois Farm Bureau proposal.
About 356 IFB voting delegates attending their annual meeting Monday in St. Louis decided to allow such farmland sellers six months to find like property. The current 1031 tax exchange law only allows 45 days to re-invest farmland proceeds.
"This boils down to a class war of haves and have-nots," said Terrell Sturgell, an Edgar County farmer. "This organization needs to decide to completely change the law or live with it. Let's not pussy foot around with this."
Delegates representing a record 413,850 members, of which 80,000 are farmers, debated the changes for nearly 40 minutes. The contentious issue prompted nearly three hours of debate last year, with no changes approved.
"I have been a participant and a beneficiary of 1031 exchanges. It's a complex tax code. I don't know that we can make these changes without a more comprehensive study," said Steve Pitstick of suburban Kane County.
A special task force spent the bulk of last year studying the issue with help from the University of Illinois and the Illinois Society of Professional Farm Managers and Rural Appraisers. The study showed half of all farmland sales last year were 1031 exchanges. The tax law adds $300 to $400 per acre to farmland prices, according to the study.
Furthermore, the study showed some farmland sellers would re-invest in farmland regardless of tax deferral. Others who feel they are forced to re-invest in farmland within the required 45 days represent the most significant force in driving farmland prices higher, the study said.
"We face dramatic changes in farming. The same thing happened a few years ago with livestock. The small producers weren't sure they wanted to support large producers. Now there's hardly any livestock. Land is going into a very few hands," said Jim Sheaffer of Lee County.
Delegates also voted to change the code to allow exchangees to re-invest money from farmland sales into other property or retirement investments. And new policy calls for tax incentives for people who sell or lease property, machinery and other farm assets to beginning farmers.
Delegates also took a strong stance on increasing use of renewable fuels made from corn and soybeans.
Members will seek legislation requiring gasoline sold in Illinois contain 10 percent corn-based ethanol. The legislation would further require all diesel fuel to contain a minimum of 2 percent soybean oil. Minnesota already requires those fuel components.
Delegates also want to require all new gasoline-powered vehicles to be capable of burning E-85 fuel. The fuel is a blend of 85 percent ethanol and 15 percent gasoline.
Delegates said those vehicles should further contain yellow gas caps to distinguish them as able to burn E-85. National energy policy dictates use of 7.5 billion gallons of renewable fuel by 2012, but delegates passed a policy supporting energy self sufficiency by 2020.
Increasing numbers of proposed wind farms around the state prompted delegates to urge state development of minimum standards, including property setbacks as well as other siting issues and performance bonds. Delegates further want to see state standards for uniform property tax assessments for wind farms crossing county lines.
In other action, delegates approved development of a wildlife nuisance permit program to control animals that damage crops and property. The program would involve permit transferability and a sufficient number of permits to reduce property damage.
All the votes will become the basis for a lobbying platform that will be used by the IFB to seek legislative changes.