I was informed by my local State Senator this past week that an issue I wanted addressed by our new Governor and her administration has been resolved. The best part is the resolution will greatly help farmers and ranchers in Oklahoma.
A little background: The Oklahoma State Constitution provides for the exemption from ad valorem taxation of household goods and livestock employed in the support of a family. Okla. Const. Art. 10, Sec. 8A. The previous Attorney General issued an opinion on this provision that stated “in support of a family” was limited to farmers and/or ranchers that owned the livestock in their individual name or as sole propreitorships. If livestock were owned through a limited liability company, a family partnership or a corporation, the livestock should have been subject to the County’s ad valorem taxes.
The conflict that arises here is that all of the forms of ownership that allowed for exemption from property taxes would subject the farmer or rancher to unlimited liability in the event a lawsuit arose. For example, if a fence went down and cattle were out at night and caused a significant automobile accident, the farmer and his insurance would have to pay all judgments that arose from that accident; even to the point of having to sell land, if the judgment far exceeded liability coverage. Under the previous Attorney General ruling, there was no way to limit the liability to just the cattle unless you wanted to pay ad valorem taxes on them.
I was informed that the new Attorney General opinion approves the use of family limited liability entites. The opinion supposedly interprets the clause (in the state Constitution) “in support of the family” to include any entity where a family unit, consisting of common descendents, e.g. father/son, siblings, or cousins, to be exempt from ad valorem taxation on livestock as well. When the opinion is published, I will have more detail. In addition, my local Senator informed me the Legislature is proposing a bill to make this interpretation a statute, rather than just an Attorney General opinion.
If you would like to schedule a consultation to see how you can limit your liability, then call my office at 580-318-8829 to discuss how this law change can affect your family farm.
Brent S. Howard, Esq.