Conservation Security Program; Primary Purpose Determination To Exclude Program Payments From Gross Income Under Section 126 of the Internal Revenue Code, 36557 [05-12516]

Download as PDF 36557 Notices Federal Register Vol. 70, No. 121 Friday, June 24, 2005 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. DEPARTMENT OF AGRICULTURE Conservation Security Program; Primary Purpose Determination To Exclude Program Payments From Gross Income Under Section 126 of the Internal Revenue Code Office of the Secretary, USDA. Notice of determination. AGENCY: ACTION: 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 VerDate jul<14>2003 19:06 Jun 23, 2005 Jkt 205001 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 PO 00000 Frm 00001 Fmt 4703 Sfmt 4703 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 E:\FR\FM\24JNN1.SGM 24JNN1

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[Federal Register Volume 70, Number 121 (Friday, June 24, 2005)]
[Notices]
[Page 36557]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-12516]


========================================================================
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.

========================================================================


Federal Register / Vol. 70, No. 121 / Friday, June 24, 2005 / 
Notices

[[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