A tax credit designed to encourage agricultural businesses to safeguard certain fertilizers and pesticides and protect against their potential theft and misuse is set to expire at the end of this year. The Agricultural Chemical Security (ACS) Tax Credit provides a 30% federal income tax credit for “eligible agricultural businesses” with “qualified chemical security expenditures” between May 23, 2008, and December 31, 2012. Unlike a tax reduction which only reduces the taxable income subject to tax, a tax credit results in a dollar-for-dollar reduction in the amount of tax owed by the taxpayer. In other words, the ACS Tax Credit would offset 30% of the cost of qualified security expenses.

“Eligible agricultural businesses” is defined broadly to include those that sell agricultural products, including specified agricultural chemicals, at retail, predominately to farmers and ranchers; or manufacture, formulate, distribute or aerially apply specified agricultural chemicals.

“Qualified chemical security expenditures” include, among others:

•    Employee security training and background checks;

•    Limitation and prevention of access to controls of specified agricultural chemicals stored at the facility;

•    Protection of the perimeter of specified agricultural chemicals;

•    Installation of security lighting, cameras, recording equipment and intrusion detection sensors; and

•    Implementing a site security plan.

There are two limitations that apply to the amount of the credit that can be claimed by a taxpayer, including a $100,000 per facility aggregate credit limit as well as an annual $2,000,000 credit limit for all facilities.

Because the Internal Revenue Service defines “eligible agricultural businesses” broadly, numerous businesses that manufacture and sell agricultural chemicals are eligible to take advantage of the ACS Tax Credit. They must act quickly however, as again, the ACS Tax Credit is set to expire this year. This is a great opportunity to offset some of your chemical security expenditures.

The tax credit can be claimed by completing and filing IRS Form 8931.

 

By guest blogger Michelle Goebel - Director, Marketing/Petrochemical & Energy at Tyco Integrated Security

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