Senate Agriculture panel presses tax officials on current-use rules and options for horse farms

Senate Agriculture committee members devoted a 90-minute session April 2 to how Vermont's current-use land tax program treats new construction and equine-related operations, pressing the Department of Taxes for options to reduce steep, single-year penalties for missed enrollment deadlines and to clarify whether boarding and other services should qualify as farming.

The department described the program as large and administratively intensive: "it's about $78 million in foregone state education and local municipal tax" payments tied to current-use enrollments, Will Baker, legal director at the Department of Taxes, told the panel. He said roughly 19,800 parcels are enrolled statewide.

Why it matters: Land placed in current use is taxed at a use value to support agriculture and working lands, while buildings on that land can be taxed differently depending on whether their owners meet the statutory definition of the "business of farming." That distinction can trigger large tax bills when a landowner builds a new structure or changes ownership and misses the program's filing deadlines.

Baker said the statute does not mention horses specifically: "there's nothing about horses in the current use law," and courts have generally upheld the tax department's interpretation. He described two categories of equine income: A (activities that clearly count as farming, such as breeding and selling horses) and B (service-based activities such as boarding, lessons, camps, shows and carriage rides) that often fall outside the statutory definition because they are service- or experience-oriented rather than agricultural-product sales.

Committee members and department staff explored two main pathways for equine operations seeking enrollment for buildings: raise the share of qualifying farm income above the 50% statutory threshold, or change the law to broaden what counts as farm income. Baker warned both approaches carry trade-offs: shifting categories could increase the number of parcels enrolled and the state's foregone revenue, and would require carefully worded statutory language and administration rules.

Several lawmakers gave a concrete example of the harms at stake. One member described a constituent who missed the enrollment deadline and faced roughly a $34,000 increase in his tax liability; committee members asked whether the department could offer a graduated penalty or a single-year "true-up" process to soften that outcome while preserving program integrity. Department staff said the system's timing, municipal assessment processes and the way tax rates and bills are set make after-the-fact adjustments complex but not necessarily impossible, and they invited the committee to work on draft language for a limited remedy.

On administrative and outreach issues, the department described multiple existing communications tools: an annual mailing (June reminder), a required annual agriculture certification for certain parcels (no fee), change-of-appraisal notices, and automated flags tied to property-transfer tax returns. The department also noted operational constraints: current-use applications require careful review, town listers and assessors are integral to identifying new buildings, and many small towns have lost capacity to perform on-the-ground notices.

Stakeholder engagement: The committee and tax staff agreed to coordinate outreach with the Agency of Agriculture, the Vermont Bar Association (to remind real-estate attorneys of transfer-related responsibilities) and equine stakeholders. "We are here to collaborate on that as well," Maggie Lens of the Vermont Equine Industry Group said, offering a pending industry survey as background to shape any legislative language.

What's next: Department officials agreed to work with the committee on draft statutory language that could (1) define bona fide equine farming activities more precisely, and (2) craft an intermediate remedy or true-up mechanism for landowners who miss enrollment deadlines but show good-faith compliance. The committee closed by scheduling follow-up outreach and a next check-in.

Attributions in this article are drawn from committee remarks and the Department of Taxes testimony. Quotes were attributed to speakers who self-identified in the transcript or were identified by role; where the transcript used inconsistent spellings for a department director, this article uses the descriptive role "Director, Property Valuation & Review" when referring to that official.