Arkansas

Property Classification

The Arkansas statutes do not specifically dictate classes of property since all property is taxed at the same rate and on the same percentage of its assessed value. Agricultural land, pasture land, timberland, residential property, and commercial land are valued at their "use value." (Arkansas Code § 26-26-407)

Timberland is valued for taxation purposes upon the basis of its timber productivity or use and upon the productivity of the soil, and is assessed at the same percent and taxed at the same rate as other property (Sec. 15(b), Art. 16, Ark. Const.). Timber sold separately and apart from the land is classed and taxed as personal property (Arkansas Code § 26-3-205). Timber interests are assessed and taxes collected in the county where the timber is located.

Valuation-Timberland

Because of the thirty to forty-year growth cycle of marketable timber and the variable growth volumes for each year a discount cash flow model was used to best represent the use value. This model takes into consideration the startup capital for tree planting, herbicidal and fire treatments, as well as income produced through various thinning's of the growth cycle. This results in culmination of information brought back to the present worth of the site.

The timber productivity of each soil is measured by the soils indicator species and site index, as assigned by The Natural Resource and Conservation Service (NRCS). Utilizing the indicator species and the site index as the determining factor for productivity, a discount cash flow determines value for:

Soils with a Site index greater than 90 is Very Productive	Pine High Site
Soils with a Site index of 89 to 70 is Productive	Medium Pine Site
Soils with a Site index of 69 to 50 is Marginal	Low Pine Site
Soils with a Site index 49 and below is Unproductive	Min. Land Value
All Hardwood lands	Hardwood Site Value

The basic formula for Income from thinning and final harvests is:

Using the calculated income from harvest, the timber value can be calculated using this formula:

The soils value is then determined by multiplying total acres to determine total value and then calculating a weighted value by soil type for each region. For information regarding the discount cash flow formula for timber land please contact the Assessment Coordination Department, Guidelines for The Mass Appraisal Of Cropland, Timberland, and Pastureland In The State Of Arkansas.

The total values are then multiplied by the Assessment Rate (20%) as prescribed by law for all property in the state. That determines its Assessed Value. It then needs to be multiplied by local millage rate to determine a tax amount.

Timber Rights:

If timber rights are held separately from the fee simple in the land they are assessed separately from the land (Arkansas Code § 26-26-1109(a)), and the sale of the timber rights or the land for nonpayment of taxes will not affect title to the other. Tax-delinquent timber rights are subject to sale for nonpayment of taxes as provided by law for the sale of delinquent lands. Timber rights forfeited for nonpayment of taxes are certified and redeemed in the same manner provided for the certification and redemption of real estate. The purchaser of timber rights at a tax sale has whatever right the former owner had to enter, cut, and remove the timber (Arkansas Code § 26-37-211).

There is an annual tax of 20¢ per acre on all timberlands in the state to assist in defraying the cost of a statewide program of forest fire protection (Arkansas Code § 26-61-103). It is a special tax, not an ad valorem tax, and is collected at the same time real estate taxes are collected but no later than October 15 of the year following the year in which they are levied (Arkansas Code § 26-61-108, A.C.A.). A penalty of up to 25% of the amount due is added for delinquent payments, and the tax and penalty are collected at the same time and in the same manner as is provided by law for delinquent real property taxes.

Exemption from tax - Disabled veterans, surviving spouses of disabled veterans, and surviving minor dependent children of disabled veterans who are eligible for the exemption from the payment of all state taxes on the homestead and personal property owned by them, as provided for in Arkansas Code § 26-3-306, shall be exempt from the payment of this special timberland tax if the amount of tax owed is less than five dollars ($5.00).

In addition to the property tax discussed above there is a severance tax that is collected from each producer of natural resources and each producer of timber in the State of Arkansas. (Arkansas Code §§ 26-58-107(a) and 26-58-109)

For purposes of this discussion the following definitions apply: (Arkansas Code § 26-58-101)

"Sever," "severed," or "severing" - mean natural resources cut, mined, dredged, or otherwise taken or removed, for commercial purposes, from the soil or water.

Point of severance - means the place at which transportation of natural resources or timber has been or is about to be commenced for use or processing after being severed;

Primary processor - means any person, firm, corporation, or other entity engaged in business as a sawmill, chipper mill, stud mill, square mill, plywood or veneer mill, whole tree chipping mill, post, pole, or piling plant, charcoal plant, processed board mill, bolt working mill, pulp mill, planing or surfacing mill, or other mill or facility where timber first undergoes any processing after harvesting;

Timber - means either softwood or hardwood species of trees suitable for use as saw-logs, pulpwood, veneer bolts or billets, stave bolts or billets, and splits, handle and other bolts or billets including chemical wood, cross ties, posts, poles, piling, chips, charcoal, or any now known or hereafter discovered use of wood or wood pulp;

Acquired - when used in reference to the severance tax on timber, means the time when timber is first weighed or measured by a primary processor after severance;

Time of severance - means the date on which transportation of natural resources or timber has been or is about to be commenced for their use or processing after being severed;

Producer - means any person, firm, receiver, or other fiduciary, corporation, or association, who or which engages in the business of severing natural resources or timber;

Transporter - means any person, firm, receiver, or other fiduciary, corporation, or association, who or which transports natural resources or timber from the point of severance, or other point within, across, or out of the State of Arkansas; and

Purchaser - means any person, firm, receiver, or other fiduciary, corporation, or association, consignor, agent, or other dealer, by whatever name called, who or which acquires title, outright or conditionally, to any interest in severed natural resources or timber.

NOTE: The "severance tax" shall not apply to nor shall any severance tax be required of or collected from an individual who occasionally severs natural resources or timber from his own premises to be utilized by him in the construction, repair, or maintenance of his own structures or improvements. (Arkansas Code § 26-58-108)

Rate of tax

On timber, the tax shall be collected, reported, and remitted by each primary processor and shall be computed on the weight of such timber as determined at the last time the timber is weighed prior to undergoing the first processing after severance thereof and shall be at the following rates: Arkansas Code § 26-58-111(7)

Pine Timber	$0.178/ton
All other timber	$0.125/ton

If any primary processor of timber is unable to weigh the timber as required herein because an approved weight scale is not available, the primary processor shall use the following conversion factors to convert other measurements of timber to weight:

Product	CONVERSION Factors
SAWTIMBER
Pine	16,000 lbs./MBF Doyle
All other	16,000 lbs./MBF Doyle
PULPWOOD
Pine	5,000 lbs./cord-128 Cu. Ft.
All other	6,000 lbs./cord-128 Cu. Ft.
POSTS OR POLES
Less than 10' in length	30 Posts/Ton
POSTS OR PILING
Greater than 16' in length	40 Lineal Ft/Ton
SPLIT CORDS	6,000 Lbs./Cord-128 Cu. Ft.
VENEER CORDS	5,000 Lbs./Cord-128 Cu. Ft.
HANDLE AND OTHER CORDS	6,000 Lbs./Cord-128 Cu. Ft.
CHEMICAL CORDS	6,000 Lbs./Cord-128 Cu. Ft.
WHOLE TREE CHIPS
Pine	5,000 Lbs./Cord-128 Cu. Ft.
All other	6,000 Lbs./Cord-128 Cu. Ft.

Reporting and Payment of Severance Tax (Arkansas Code § 26-58-114)

Each producer of natural resources and each primary processor of timber within twenty-five (25) days after the end of each month, whether or not he shall have actually severed natural resources or timber during the preceding month, shall file with the director a report setting forth, in a form to be prescribed by the director, the kind of natural resources or timber, if any, severed by such producer or processed or acquired for processing by such primary processor during the next preceding month, the point of severance thereof, the gross quantity so severed and the cash value thereof, the amount of severance tax due, and such other information as the director may reasonably require for the proper enforcement of the provisions of this subchapter.

The report shall be verified by the producer or primary processor himself in the instance of an individual producer or primary processor and by a member or officer or the manager of the producer or primary processor in all other instances.

The payment of the full amount of the severance tax appearing to be due from the report shall accompany the report.

Within ten (10) days after any producer or primary processor shall have ceased operation with the intention of no longer engaging in the business of severing or processing natural resources or timber, the permit theretofore issued shall be returned by him to the director for cancellation; but any such producer or processor whose permit shall have been so cancelled may engage in such business upon the filing of a new application with and the issuance of a new permit by the director.

Any producer or primary processor who shall fail to comply with the provisions of this section shall be guilty of a misdemeanor and upon conviction shall be fined not less than one hundred dollars ($100) nor more than five hundred dollars ($500) for each such offense; and the willful false swearing as to the contents of any such report shall constitute perjury and shall be punishable as such.