Extension Circular 1151OREGONRevised August 1988

OCTfl e1988 Woo and50c OR HEO/E 4049 1 11 /90 STATE LIBpp i_. .1 _L - - I -

Suther1r!d7 Ch; le F

ha r ye s t t a

Business Management jOregon's Forest Products

Harvest TaxCF. Sutherland, Jr.

Oregon Revised Statutes 321.005and 477.805 contain the law thatapplies to the Forest ProductsHarvest Tax.

In addition to property taxes,including severance taxes on pri-vately owned timber, Oregon leviesa special tax on all "merchantableforest products" harvested fromprivate, county, state, and Federalforest land. For this law, merchant-able forest products are defined as"all logs which can be measured inboard feet, including those logschipped in the forest." Firewoodand products normally left in thewoods to be burned as slash are nottaxed.

The revenue collected from thistax is used to support forestryresearch at Oregon State University,to provide an emergency fund forsuppression of forest fires (primarilyon private owned forest land andland managed by the U.S. Bureau ofLand Management), and to admin-

Charles F. Sutherland, Jr., Extensionforest taxation specialist emeritus,Oregon State University. Artell J. Amos,timber tax manager, East Region,Timber Section, and Larry C. Richards,program manager, Forest ProductsHarvest Tax, Oregon Department ofRevenue, provided consultation andassistance.

Oregon State University Extension Service

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ister the Oregon Forest Practices Act. Table 1.The Oregon Forest Products Harvest Tax is collected on all merchantableTable 1 summarizes the various forest productsa harvested in Oregon. Tax is used for forestry research, fire suppres-taxes levied under this law. sion, and enforcement of the Oregon Forest Practices Act. Information current to

June 30, 1989.

Who pays the tax?The owner of the forest product

at the time the product is harvestedis liable for the harvest tax. Amongthose defined as owner under theForest Products Harvest Tax andtherefore liable for paying the taxare:

the purchaser of Federal, State, orprivate stumpage (standing timber);the private owner of forest landwho cuts and markets timber fromhis or her land.

Before harvesting forest products,an operator must fill out a notifica-tion of operations form (harvestpermit) available at local offices ofthe Oregon Department of Forestry.The person listed as owner of thetimber on this form automaticallyreceives a copy of the ForestProducts Harvest Tax return. It isthe responsibility of the owner at thetime of harvest to insure that the taxis paid.

How much is the tax?Oregon levies a Forest Products

Tax (table 1) of 31 cents perthousand board feet of merchanta-ble forest products harvested fromany forest land in Oregon. Of this31 cents, 21 cents is used to financeforestry research at Oregon StateUniversity.

The remaining 10 cents perthousand board feet provides thefunds to enforce the Oregon ForestPractices Act. This act protectsOregon's soil, water, and forestresources, including fish and wildlifehabitat.

In addition to the 31 cents perthousand board feet levied ontimber harvested on any forest land,Oregon levies a harvest tax of 15cents per thousand board feet onmerchantable forest products har-vested on protected forest land (landprotected from fire by the stateforester or by agreement or contractwith the state forester or StateBoard of Forestry).

Amount of taxTermination Applicable area and (per 1,000 BF)

Purpose of tax date products taxed in cents

Finance forestry Indefinite Harvests of merchantableresearch forest products on forest land

Finance forestry June 30, 1989 Harvests of merchantable 16research forest products on forest land

Finance enforce- June 30, 1989 Harvests of merchantable for- 10ment of Oregon est products on forest landForest PracticesAct

Finance fire Indefinite Harvests of merchantable 15suppression forest products on protected

forest landba Merchantable forest products includes "all logs which can be measured in board feet, includ-

ing those logs chipped in the forest." Firewood and products normally left in the woods to beburned as slash are not taxed.

b Protected forest land means any forest land protected from fire by the state forester or byagreement or contract with the state forester or State Board of Forestry. Federally ownedland within national forest boundaries is not classed as "protected" forest land; therefore,there is no Forest Products Harvest Tax for fire suppression on timber cut on this land.

Because the U.S. Forest Service isresponsible for fire suppression onFederal forest land managed by theService, forest products harvestedon these lands are exempt from theOregon tax for fire suppression.

To summarize, owners of timber,standing or windfalls, harvested onprotected lands pay a total ForestProducts Harvest Tax of 46 centsper thousand board feet. Protectedlands include all private, State andFederal forest land, except landmanaged by the U.S. Forest Service.Owners of timber harvested fromU.S. national forests pay a totalForest Products Harvest Tax of 31cents per thousand board feet.

The Oregon Legislature reviewsthese tax rates every 2 years.

What productsare taxed?

Oregon taxes all merchantablelogs, either as directly measured inthousands of board feet, or asindirectly measured through conver-sion from some other measurement.The measurement standard is theScribner Decimal C log rule. Inwestern Oregon, forest products are

taxed on their board foot scale for32-foot log lengths; in easternOregon, for 16-foot log lengths.

(Eastern and western Oregon areseparated by a boundary traced bythe summit of the Cascade Moun-tains. Wasco, Jefferson, Deschutes,and Klamath counties are in easternOregon. Hood River County is inwestern Oregon.)

The tax is based on the board footvolume after defects have beendeducted. The tax on "cull" logs isbased on the net usable log volumeor its equivalent net chippablevolume.

In addition to all logs, chips aretaxed. The volume in thousands ofboard feet for chips and logs, asmeasured by weight, is determinedby conversion tables preprinted onthe Forest Products Harvest Taxreturn.

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Is there a tax exemption?The first 25,000 board feet of

harvested during thefiscal year (July ito June 30) isexcluded when computing the For-est Products Harvest Tax due.However, if you cut less than 25,000board feet in the fiscal year, youmust still file the return, eventhough no tax is due.

When is theharvest tax due?

The date the harvest tax is duedepends on the amount of tax youowe within the 6-month reportingperiod (July through December orJanuary through June). If yourestimate of the harvest tax due forthe next 6-month period is less than$300, then you may file a semiannualreturn for forest products harvestedin the preceding 6-month period, onor before the last day in January orJuly.

If your estimate of the harvest taxdue for the next 6-month reportingperiod is $300 or more, then youmust file an Estimate of TaxLiability return for that period andmake a quarterly payment of at leastone-half of the estimated tax to theDepartment of Revenue.

You must file the Estimate of TaxLiability form together with the taxpayment by the end of the fourthmonth in the 6-month reportingperiodthat is, by either October31 or April 30.

Here is a relatively easy way toestimate whether your forest prod-ucts harvest tax will exceed $300 forthe 6-month reporting period andthus require that you file anEstimate of Tax Liability return forthe quarter.1. If you are cutting on land

protected by the Oregon Depart-ment ofForestry, divide the $300limit by the Forest ProductsHarvest Tax rate for this land.This gives you an estimate of thenumber of board feet you can cutin a 6-month reporting periodbefore you must file an Estimateof Tax Liability form for the firstquarter of the 6-month reportingperiod. The Forest ProductsHarvest Tax to July 1, 1989, is$0.46 per thousand board feetharvested: $300 divided by $0.46equals 652 thousand board feet.

2. If you are cutting on land notprotected by the Oregon Depart-ment ofForestry (primarily landwithin national forest boundaries),divide the $300 limit by thecurrent tax rate for this land,$0.31 per thousand board feet.This gives you the thousands ofboard feet you may harvest in a6-month reporting period beforeyou must file the report and paythe estimated tax on a quarterlybasis: $300 divided by $0.31equals 968 thousand board feet.

If the legislature changes theForest Products Harvest Tax rate,use the new rate to estimate thethousands of board feet you arepermitted to harvest in a 6-monthreporting period before you mustfile the Estimate of Tax Liabilityreturn and pay the Forest ProductsHarvest Tax on a quarterly basis.

What are the penaltiesfor late or deficientpayment or not filing?

A delinquent tax due for the6-month reporting period bears aninterest rate of ii Wo per year,from the time the return wasdue until you pay it, plus a penaltyof 5% of the amount of thedelinquent tax. An additional 20%of the delinquent tax is assessed forreturns filed more than 3 monthsafter the due dates (July31 orJanuary 31 for the previous 6-monthreporting period).

A delinquent estimated tax, duefor the first quarter in each 6-monthreporting period, bears a penalty, inthe form of interest, at the rateof 1% per month from the time thereport was due. However, nopenalty is levied if the report is filedon time and the tax payment paid atthat time meets one of the followingconditions:

1. payment is at least 50% ofthe actual tax liability for theprior 6-month period or

2. payment is at least 40% ofthe actual tax liability for thepresent 6-month period or

3. payment is 100% of the taxliability on the actual timberharvested during the first calen-dar quarter of the present 6-month reporting period.

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If a tax return is not filed for3 consecutive years, a penalty of100% of the delinquent tax isassessed.

How can you appeal?

The taxpayer may appeal aNotice of Deficiency (of taxes)issued by the Department ofRevenue by filing a petition withthe Department of Revenue inSalem within 30 days of the dateof the notice. If you choose topresent your protest personally,you may request an informalconference with a representativeof the Department of Revenue.

If, after considering yourpetition, the Department ofRevenue finds that a balance isdue, you will receive a Notice ofAssessment for deficient taxes,plus penalty and additionalinterest. If you appeal thisnotice, you must do it in writing,within 90 days of the mailingdate of the Notice of Assessment.You appeal first to the directorof the Department of Revenue,then, if necessary, to the OregonTax court.

(OREGON STATE UNIVERSITYEXTENSION SERVICE

The Woodland Workbook is a collection of publications prepared by the OregonState University Extension Service specifically for owners and managers of private,nonindustrial woodlands. The Workbook is organized into 11 sections containinginformation of long-range and day-to-day value for anyone interested in wise man-agement, conservation, and use of woodland properties. It's available in a three-ringbinder with tabbed dividers for each section.

For information about how to order and for a current list of titles and prices, writeAgricultural Communications, Publications Orders, Oregon State University,Corvallis, OR 97331-2119, or inquire at the office of the OSU Extension Service thatserves your county.

Extension Service, Oregon State University, Corvallis, 0. E. Smith, director. Thispublication was produced and distributed in furtherance of the Acts of Congress ofMay 8 and June 30, 1914. Extension work is a cooperative program of Oregon StateUniversity, the U. S. Department of Agriculture, and Oregon counties.

Oregon State University Extension Service offers educational programs, activities,and materialswithout regard to race, color, national origin, age, sex, ordisabilityas required by Title VI of the Civil Rights Act of 1964, Title IX of theEducation Amendments of 1972, and Section 504 of the Rehabilitation Act of 1973.Oregon State University Extension Service is an Equal Opportunity Employer.

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