Page 30 - Tree Line - North Carolina Forestry Association - First Quarter 2023

By Andrew Bosserman &
Ryan Walker – Shumaker, Loop & Kendrick, LLP
How Forest Landowners Can Benefit From the Inflation Reduction Act
On August 16, 2022, President Joe Biden signed the Inflation Reduction Act of 2022 into law. The Act is a scaled-back version of the Build Back Better Act proposed by the Biden administration in 2021.
The new law contains many different provisions, including a minimum corporate income tax, increased funding for the IRS, and prescription drug price reform.
The Act also contains many spending provisions for investments to reduce the effects of climate change, including provisions that will directly benefit forest landowners! Although experts debate whether the Act will actually reduce inflation, it is poised to be the largest investment by the U.S. government in climate mitigation to date.
The following is a summary of the main provisions that will benefit forest landowners:
$400 Million in Cost Share for Forest Landowners
One of the most significant benefits for forest landowners is that the Act appropriates $400 million in competitive grants and cost share for underserved forest landowners or forest landowners who own fewer than 2,500 acres. These grants will come from the U.S. Forest Service (USFS) and will be for “forest resilience practices” and “climate mitigation.”
As a quick refresher, cost-share payments are payments from a government agency to
a forest landowner to help offset the costs of specific forest improvement projects. Cost- share programs are one way the government encourages productive use and management of private forestland. In some instances, a forest landowner may be eligible to exclude their cost-share payments from their federal taxable income. However, a forest landowner should consult with their tax advisor to determine
the correct tax treatment of any cost-share payments received.
Other Provisions Benefiting Forest Landowners
• $50 million in USFS competitive grants to states and eligible entities to distribute to private forest landowners for practices that increase carbon removal
• $700 million in competitive grants to states via the Forest Service Legacy Program
to conserve environmentally important forest land that is threatened by conversion into non- forest property, with priority given to projects that offer natural carbon isolation benefits
• $100 million for the USFS Wood Innovation Grant Program to support solutions that transform wood and forest residue into innovative products
• $1.8 billion for the USFS to support wildfire risk reduction measures on National Forest System lands
• $8.45 billion for grants for practices
that directly improve soil carbon storage or decreased emissions of greenhouse gases (this includes financial and technical assistance resources for producers and landowners to plan and install structural, vegetative, and land management practices on eligible land)
More Information to Come
More information will be released in the coming months on how forest landowners can apply for and take advantage of the forestry provisions listed above. The USFS will likely engage in a rule-making process to establish specific rules and processes for the authorized programs and funding. Interested parties should be prepared to engage in this process to ensure that their voice is heard and rules are favorably written.
28 ncforestry.org / FIRST QUARTER 2023
ABOUT THE AUTHORS
Andrew Bosserman is a tax attorney, CPA, and former IRS agent with an in-depth knowledge of the forest and Christmas tree industries gained through operating his own tree farm. He currently practices law at the Charlotte, NC office of Shumaker, Loop & Kendrick, LLP.
Ryan Walker is SVP of Federal Affairs at Shumaker Advisors, where he provides strategic government
affairs counsel and direct advocacy for organizations large and small. He is
based in Washington, D.C., where he has developed relationships on Capitol Hill and in the executive branch over the past two decades through his work in politics, government, and business.