Increased Minimum Gross Sales
Beginning in the Tax Year 2015, lands subject to farmland assessment must establish $1,000.00 in gross sales for the first 5 acres of preserved farmland, and $5.00 for each additional acre. Prior to this change, only $500.00 in gross sales was required for the first 5 acres in agricultural use. This change does not apply to lands assessed under a Woodland Management Plan, which must still demonstrate $500.00 in gross sales for the first 5 acres, and $0.50 for each additional woodland acre. Farms receiving payments from the soil conservation program may delay meeting the increased gross income requirement until their contract expires.
Failure to Generate Adequate Gross Sales
In keeping with a 2013 ruling of the Tax Court of New Jersey, failing to meet the income requirement in a given year does not trigger roll back taxes: only a change to a non-qualifying use triggers roll back taxes. In other words, failing to qualify for the reduced assessment in a current year does not require paying additional taxes for past years, if the failure to qualify is solely based upon inadequate gross sales, and the property remains in agricultural use. However, the land will be treated as if the annual FA-1 application had not been submitted. Nonetheless, it is still advised that the FA-1 be submitted to confirm the qualifying use remains and is documented for future years. The Farmland Evaluation Committee may review and change the minimum gross sales necessary to maintain qualification, with any such changes becoming effective three years later.
Additionally, if the farm acreage is less than 7 acres, the FA-1 application must be accompanied by a descriptive narrative of the qualifying use, a sketch of the location of the agricultural/horticultural use, and the number of acres devoted to the qualifying use. All FA-1 applications must include proof of sales. Gross or intentional misrepresentations on applications for assessment are subject to civil penalties of up to $5,000.00, in addition to any roll back taxes which might be imposed. Assessors are charged with inspecting agriculturally assessed properties at least every three years.
FA-1 Applications remain due on or before August 1 of each year. Additionally, the Department of Agriculture and State Board of Agriculture and Division of Taxation have adopted generally accepted farming practices. These guidelines are used by tax assessors to evaluate a parcel’s active devotion to agricultural or horticultural use. Tax assessors are additionally required to complete continuing legal education regarding the farmland assessment program.