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Timber Yield Tax Regulations

Article 1. Valuation of Timberland and Timber

• 1020 Timber Value Areas
• 1021 Timberland Grading Rule
• 1022 Standard Unit of Measure
• 1023 Immediate Harvest Value
• 1024 Exempt Timber
• 1025 Value of Timberland [Repealed.]
• 1026 Timber Owner
• 1027 U.S. Forest Service Timber Volumes

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Regulation 1020. Timber Value Areas.

Authority cited: Sections 38204 and 38701, Revenue and Taxation Code. Reference: Sections 38109 and 38204, Revenue and Taxation Code.

The following nine designated areas contain timber having similar growing, harvesting and marketing conditions and shall be used as timber value areas in the preparation and application of immediate harvest values:

Area 1

Del Norte County

Humboldt County

Area 2

Marin County

Mendocino County

Napa County

Sonoma County

Area 3

Alameda County

Contra Costa County

Monterey County

San Francisco City and County

San Mateo County

Santa Clara County

Santa Cruz County

Area 4

Colusa County

Glenn County

Lake County

Shasta County west of Interstate Highway No. 5

Solano County

Siskiyou County west of Interstate Highway No. 5

Tehama County east of Interstate Highway No. 5

Trinity County

Yolo County

Area 5

Shasta County east of Interstate Highway No. 5

Siskiyou County east of Interstate Highway No. 5

Area 6

Lassen County

Modoc County

Area 7

Butte County

Nevada County

Placer County

Plumas County

Sierra County

Sutter County

Tehama County east of Interstate Highway No. 5

Yuba County

Area 8

Alpine County

Amador County

Calaveras County

El Dorado County

Sacramento County

San Joaquin County

Stanislaus County

Tuolumne County

Area 9

Fresno County

Imperial County

Inyo County

Kern County

Kings County

Los Angeles County

Madera County

Mariposa County

Merced County

Mono County

Orange County

Riverside County

San Benito County

San Bernardino County

San Diego County

San Luis Obispo County

Santa Barbara County

Tulare County

Ventura County

History—Adopted November 4, 1976, effective January 1, 1977.

Amended January 31, 1977, effective February 1, 1977.

Amended October 18, 2010, effective November 17, 2010.

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Regulation 1021. Timberland Grading Rule.

Note: Authority cited: Section 15606, Government Code; Section 38701, Revenue and Taxation Code. Reference: Sections 434.1 and 38204, Revenue and Taxation Code.

(a) General. Beginning with the 1977-78 fiscal year, privately owned land and land acquired for state forest purposes which is primarily devoted to and used for growing and harvesting timber and is zoned for a minimum 10-year period as timberland production zone (TPZ) will be valued for property taxation on the basis of its use for growing and harvesting timber, plus the value, if any, attributable to existing, compatible, nonexclusive uses of the land.

(b) Site Quality. Timberland is rated for productivity based upon its ability to produce wood growth on trees. Five general site classes are established wherein Site I denotes areas of highest productivity, Site II and Site III denote areas of intermediate productivity, and Site IV and Site V denote areas of lowest productivity. The five site quality classes are set forth within each of three general forest types: redwood, Douglas fir, and mixed conifers.

Land zoned as timberland production zone (TPZ) shall be graded by the assessor using the following site classification table as a measure of land productivity.

[FN1]

Lindquist, Ja,es L., and Marshall N. Palley. Empirical yield tables for young-growth redwood, Calif. Agr. Exp. Stn. Bull 796, 47 pp., 1963.

[FN2]

McArdie, Richard., and Walter H. Meyer. The yield of Douglas fir in the Pacific Northwest, USDA Tech. Bull. 201, 74 pp., Rev. 1961. Adjusted to average height of dominant trees after Forest Research Note No. 44, Pacific Northwest Forest and Range Experiment Station, by Forest Survey, Calif. Forest and Range Exp. Stn., 1948.

[FN3]

Dunning, Duncan. A site classification for the mixed conifer selection forests of the Sierra Nevada. USDA Forest Serv. Calif. Forest and Range Exp. Stn. For. Res. Note 28, 21 pp., 1942.

YOUNG-GROWTH REDWOOD

Site index based on average height of dominant trees at breast height age of 100 years. Use in young-growth redwood stands in which more than 20 percent of the stand by basal area is redwood and when sufficient dominant redwood trees are available to determine site index.

DOUGLAS FIR

Site index based on average height of dominant trees at age 100 years. Use in young-growth redwood stands in which 20 percent or less of the stand by basal area is redwood or when sufficient dominant redwood trees are not available to determine site index. Use also in old-growth redwood stands. In such cases, measure Douglas fir trees for determining site index. Also use for Sitka spruce, grand fir, hemlock, bishop's pine, and Monterey pine stands.

PONDEROSA PINE, JEFFREY PINE, MIXED CONIFER, AND TRUE FIR

Site index based on average height of dominant trees at age 100 and 300 years. Use also for lodgepole pine stands. For old-growth stands, use height of dominants at age 300 years.

(c) Operability. Timberland shall be rated for operability based upon such factors as accessibility, topography, and legislative or administrative restraints. On or before December 31, 1979, two classes of operability shall be used by the assessor and designated as operable or inoperable. Areas of inoperable land must be identified by the assessor. For the purpose of land site classification, inoperable means that any of the following circumstances are applicable:

(1) Extreme physical barriers prevent access.

(2) Legal or administrative restraints prevent access or harvest.

(3) Rocky ground, steep slopes, or sterile soil prevent growing or harvesting merchantable timber.

History— Adopted January 6, 1977, effective March 3, 1977.

Amended June 21, 1983, effective October 7, 1983.

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Regulation 1022. Standard Unit of Measure.

Authority cited: Section 15606, Government Code; Sections 38109, 38204, and 38701, Revenue and Taxation Code. Reference: Sections 38109 and 38204, Revenue and Taxation Code.

(a) General. In determining quantities of timber for purposes of the timber yield tax the Scribner Decimal C Log Rule based on a maximum scaling length of 20 (Scribner Decimal C (short log) Scale) feet shall be used as the standard board foot log rule for timber that is measurable by the net board foot method. This standard board foot log rule for such timber is to be used in all instances, except that in those rare instances when circumstances preclude the use of this standard board foot log rule for such timber, conversion factors as specified herein shall be employed for reporting harvested timber originally scaled using other than the standard board foot log rule.

Timber that is not normally scaled by the net board foot method shall be measured using the unit commonly employed by those dealing the wood products to which the timber is to be converted, e.g.

(b) Definitions. When used in this section the terms board foot and board foot log rule shall have the following meaning:

(1) Board foot-a solid piece of wood, 12 inches wide, 12 inches long and 1 inch thick.

(2) Board foot log rule-a method for estimating the volume in board feet of a log with a known diameter and length.

(c) Conversion Factors. When board foot volumes are not scaled using the standard board foot log rule the following factors shall be used to convert the scale employed to the standard scale.

(1) The Humboldt Log Scale shall be converted to gross Scribner Decimal C (Short Log) Scale by the application of a multiplier factor of 1.45. The actual defect in board feet as determined by the difference between that scale and the mill tally records shall be deducted from the gross Scribner scale. Until January 1, 1978, the Humboldt Log Scale when applied to old growth redwood shall be converted to net Scribner Decimal C (Short Log) Scale by the application of a multiplier factor of 1.15.

(2) The Spaulding Log Scale (Short Log) shall be converted to Scribner Decimal C (Short Log) Scale by the application of a multiplier factor of 1.02.

(3) When logs harvested in California are scaled outside California, and only when circumstances preclude the use of the Scribner Decimal C Log Rule based on a maximum scaling length of 20 feet (Scribner Decimal C (Short Log) Scale), the Scribner Decimal C Log Rule volumes attributable to long log scaling shall be converted to Scribner Decimal C (Short Log) Scale by the application of a multiplier factor of 1.20.

History— Adopted November 4, 1976, effective January 1, 1977.

Amended August 19, 1980, effective December 31, 1980.

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Regulation 1023. Immediate Harvest Value.

Authority cited: Section 15606, Government Code; Sections 38109, 38204, and 38701, Revenue and Taxation Code. Reference: Sections 38109 and 38204, Revenue and Taxation Code.

(a) Definitions.

Immediate harvest value is the amount that each species or subclassification of timber would sell for on the stump at a voluntary sale made in the ordinary course of business for purposes of immediate harvest. Such value shall be expressed to the nearest dollar per standard unit of measure applicable pursuant to Rule No. 1022, except that the immediate harvest value of Christmas trees shall be the sale price of such trees in quantities of 100 or more in the market area nearest to the place where the trees are cut and adjusted to reflect the value of the trees immediately prior to severance. Timber value areas are those areas containing timber having similar growing, harvesting, and marketing conditions.

Harvest value is the immediate harvest value in a timber value area as of the first day of the period specified by the applicable harvest value schedule.

"Timber at similar locations" means timber in an area of comparable elevation and topography, and subject to comparable logging conditions and accessibility to the point of conversion.

(b) Harvest Value Schedules. The timber owner shall determine the taxable value of the timber harvested for each harvest operation by the use of the Board harvest value schedule applicable to the tax reporting period.

The harvest value schedules adopted by the Board provide estimates of harvest values by considering gross proceeds from sales on the stump of similar timber of like quality and character at similar locations, or gross proceeds from sales of logs, or of finished products, adjusted to reflect only the portion of such proceeds attributable to value on the stump immediately prior to harvest, or a combination of both. Allowance is made for differences in age, size, quality, cost of removal, accessibility to point of conversion, market conditions, and other relevant factors.

Each value schedule provides harvest values for a timber value area taking into account species and average tree or log size. Appropriate allowances for costs of removal have been calculated by consideration of the most common logging systems used within the area, the actual methods of harvesting the timber, the volume per acre, the total volume removed per harvest operation, the typical haul range distances to a conversion point and any excessive required costs of removal.

(c) Damaged Timber. The Board, either on its own motion after consultation with the Timber Advisory Committee or in response to an application from a timber owner may specify a modification of immediate harvest value to reflect material changes in timber values that result from fire, blowdown, ice storm, flood, disease, insect damage, or other cause, for any area in which damaged timber is located. Whenever a timber owner uses such modified immediate harvest values for reporting damaged timber, he shall maintain appropriate accounting records as specified by the Board.

History— Adopted January 6, 1977, effective March 3, 1977.

Amended and effective June 24, 1997.

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Regulation 1024. Exempt Timber.

Authority cited: Section 15606(c), Government Code. Reference: Section 38116, Revenue and Taxation Code.

(a) General. There is exempt from timber yield tax timber whose immediate harvest value is so low that, if not exempt, the tax on the timber would amount to less than the cost of administering and collecting the tax.

(b) Exempt Harvest. Timber, removed from a timber harvest operation whose immediate harvest value does not exceed $3,000 within a quarter, is exempt from timber yield tax pursuant to the authority granted by section 38116 of the Revenue and Taxation Code. For the purpose of this rule, immediate harvest value shall be that value described in sections 38109 and 38204 of the Revenue and Taxation Code, and in Rule 1023. The Board harvest value schedule applicable to the tax reporting period at the time of harvest shall define the timber harvest operation, and shall be the basis for determining the immediate harvest value thereof.

(c) Nothing in this rule shall authorize the exemption of timber whose immediate harvest value exceeds $3,000.

History— Adopted December 9, 1998, effective April 8, 1999.

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Regulation 1025. Value of Timberland.

[Repealed]

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Regulation 1026. Timber Owner.

Authority cited: Section 15606, Government Code; and Section 38701, Revenue and Taxation Code. Reference: Sections 38104, 38106 and 38115, Revenue and Taxation Code; Hoopa Valley Tribe v. Nevins, et al. (1989) 881 F.2d 657.

Exempt person or agency. The timber yield tax is imposed not only on every timber owner who harvests his or her timber or causes it to be harvested but also on every timber owner of felled or downed timber who acquires title to such felled or downed timber in the state from a person or agency exempt from property taxation under the Constitution or laws of the United States or under the Constitution or laws of the State of California. In some instances, such timber owners may acquire title to felled or downed timber directly from the exempt person or agency. In other instances, however, such timber owners may acquire title to felled or downed timber from an exempt person or agency which itself has previously acquired title to the timber from another exempt person or agency.

Where timber owners of felled or downed timber have acquired title to the timber in the state from an exempt person or agency, "first person who acquires either the legal title or beneficial title to timber after it has been felled" means the first non-exempt person who acquires such title from an exempt person or agency, and such a person is a timber owner liable for applicable timber yield tax (e.g., where the person initially felling timber is exempt from property taxation and the person acquiring the felled timber is also exempt from property taxation, the first non-exempt person who thereafter acquires title to the felled timber is liable for applicable timber yield tax).

As used in Sections 38104 and 38115 of the Revenue and Taxation Code, “timber owner” does not include, however, any person who harvests timber, causes it to be harvested, or acquires title to felled or downed timber derived from Indian lands held in trust by the United States for an Indian Tribe or Band or for any Individual Indian member thereof; and no timber yield tax shall be imposed with respect to that timber upon any person who thereafter acquires title to the timber.

History— Adopted August 19, 1980, effective December 31, 1980.

Amended August 5, 1983, Section 38301 repealed effective January 1, 1983.

Amended April 22, 1992, effective September 12, 1992.

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Regulation 1027. U.S. Forest Service Timber Volumes.

Authority cited: Section 15606, Government Code; Sections 38108 and 38701, Revenue and Taxation Code. Reference: Sections 38108 and 38115, Revenue and Taxation Code.

(a) General. U.S. Forest Service timber sale contract holders shall report timber volumes harvested as hereinafter provided.

(b) Scaled Volume Billings. The Timber Sale Statement of Account (TSSA) is the basis for most U.S. Forest Service billing statements. Timber volumes shall be reported for the quarters reflected by the Timber Sale Statements of Account (e.g., April, May, and June, 1980 TSSA volumes shall be reported for the second quarter of 1980).

(c) Lump-Sum Billings. Timber volumes actually harvested, regardless of the volume purchased from, and billed for by the U.S. Forest Service, shall be reported for the quarters in which scaled. Timber sale contract holders must get and retain scaling data for such volumes.

(d) Other Methods of Reporting. Timber harvested pursuant to U.S. Forest Service timber sale contracts may be reported on a basis other than (b) or (c), above, only if a written description of the reporting basis to be used is submitted to and is authorized by the Timber Tax Section prior to the due date of the return and prior to reporting.

History— Adopted August 19, 1980, effective November 16, 1980.

Amended August 5, 1983, Section 38301 repealed effective January 1, 1983.

Amended September 16, 2015, effective November 10, 2015.