County crackdowns on falsely claiming farm tax status – The Durango Herald
Certain properties classified as agricultural when in fact they are not
Davin Montoya and his family have worked the land and raised cattle in southwest Colorado since the turn of the century.
It hasn’t always been easy, and like most ranchers and farmers who dedicate themselves to the land, it is a labor of love. Market prices fluctuate, livestock contract diseases, droughts – this is work that is not for the faint of heart.
“There really isn’t a lot of money to raise cattle,” Montoya said. “Most of the people who do it do it because they have a passion for it and the way of life.”
So it’s at least a small relief that ranchers and farmers have a benefit: a long-standing tax break for farmers, put in place decades ago to help the people who grow our food, and as a bonus, helping preserve the open space that defines the Colorado landscape.
“We are protecting this as best we can because we don’t want people who are not in agriculture to benefit from this tax break,” said Tom Compton, who has been raising cattle for 50 years near Breen. “First of all, it’s not fair, and second, it’s irritating to see people with 80 acres growing only weeds or prairie dogs getting (the tax break).”
However, it is a constant problem for county governments to eliminate people who declare farm tax exemption status just for tax relief. And the people who take advantage of it run the gamut: some people think this is a legitimate farming business, and others just want to pay less tax.
In La Plata County, for example, nearly 30 people with homes valued between $ 250,000 and $ 2.8 million have lost their farm tax status in the past three years, according to a Colorado Open Records Act filed by The Herald Durango.
La Plata County appraiser Carrie Woodson said her department reviews about 100 properties a year that qualify for the exemption that may not qualify.
“It’s a real problem,” said Woodson. “That’s why we are working actively and very hard to make sure that doesn’t happen. Because, more importantly, we need to be fair to the people who actually use their land. This is really who we have to stand up for.
Work the land
For land to benefit from agricultural tax status, it’s quite simple: an owner must produce a product on the land and sell it at a profit. Having horses for hobby or beekeeping to sell honey to friends are common uses that don’t matter.
But county tax assessors face complicated situations. For example, a local breeder puts his animals on the property of other people, just so that these people can declare agricultural tax status.
In another case, around 2012, a rancher left his cattle to graze all over the new ranch at Durango Ridge, west of Durango. The owners of the subdivision declared agricultural status, claiming that their property was used for agriculture.
A subsequent state law, brought about in part by a similar situation involving Tom Cruise’s ownership in Telluride, now states that owners must participate in the farming operation to claim farm tax status.
“We can thank Tom for that,” said Woodson.
And in other cases, people really believe their land is being used for farming.
“The ag classification is for the people who put food on all of our tables,” said Woodson. “So I ask people, ‘Are you one of those people? Do you put food on our tables? Either you do it or you don’t.
This is a robust and time-consuming effort for the five rural appraisers in La Plata County who each day visit properties across the county to determine if a property receiving a farm tax is a bona fide transaction. Woodson said in some cases it can take up to three years to remove someone from the ag classification.
“It’s a lot of time and manpower,” said Woodson. “But we are dealing with a lot of taxes, and it is a very laudable project that is only fair to the farmers.”
It is difficult to quantify how much La Plata County loses in property taxes due to people bypassing the system.
But just as an example, someone with 35 acres in the precious Animas Valley whose property is valued at $ 500,000 with a house valued at $ 2 million would pay around $ 9,000 in taxes a year in by virtue of a residential tax status. If it were taxed as a farmer, it would be about $ 2,000 less.
Multiply that by hundreds of cases across the county and the total cost quickly adds up.
Shawn Martini, vice president of advocacy for the Colorado Farm Bureau, said the benefit of the farm tax break cannot be underestimated for ranchers and farmers in Colorado.
While other businesses and industries can in most cases pass the tax burden on to the consumer by raising the price of their products, ranchers and farmers are subject to market costs beyond their control.
“Because farmers can’t adjust their prices, they have to absorb the costs and take the taxes out of their bottom line,” Martini said. “So the idea is to provide tax relief so that producers don’t have to take that away from already tight margins on their products. “
Most other states, especially in the West, offer a similar exemption from subsidies to agricultural producers, Martini said. And where it is offered, some take advantage of it.
“It’s not so much of a problem with land in areas that have been in production for a long time,” Martini said. “You see it’s more of a problem in the urban-rural interface. “
Indeed, Woodson said the problem is more of a problem in La Plata County, where an influx of people is encroaching on traditional farmland, than in neighboring Archuleta and Montezuma counties. Sometimes new people move into the county, buy a small ranch and expect farm tax relief, she said.
Montoya said if he had to pay tax rates on vacant land, he couldn’t afford to be in the cattle business. He would have to close shop on the third generation family farm and possibly sell the land to a developer who would build a subdivision.
Not only would the story disappear. The same would be true of the open space, which offers panoramic views and habitat for all kinds of wildlife. A sign on his property reads: “I’d rather see a cow than a condo. This is a reminder of what is at stake.
Last year’s devastating drought, for example, took its toll, forcing Montoya to sell part of his herd.
“You just have to do what you have to do to survive,” he said. “We will get there.”