SFIA: Three Important Things You Should Know about Program Deadlines and Withdrawal
The SFIA is a wonderfully profitable program for landowners that we support and help folks enroll in on a daily basis. However, the SFIA can be complicated at times, especially if you don't understand how the withdrawal process may impact your long-term plans. It may be years down the road, but knowing which deadlines to follow and how to plan for withdrawal should be part of your SFIA considerations. We encourage all SFIA-interested landowners to do diligent research into the program. We hope this post is helpful in understanding this program to the fullest so you can enjoy the financial and environmental benefits without any surprises.
1. A Covenant does not expire unless your SFIA enrollment is terminated.
The 8, 20, and 50-year covenant lengths are minimum enrollment periods, meaning: Your covenant does not expire unless you request termination, and thus your property will be required to follow all SFIA regulations until the covenant is removed. The first opportunity to request withdrawal from the SFIA, and thus the removal of the covenant from your property, is exactly one-half of the enrollment period (example: 4 years into an 8-year covenant).
If you’ve been enrolled in the program for at least one-half the duration of the covenant, you can request withdrawal by completing the SFIA Withdrawal Form. The MN Dept of Revenue will send a confirmation letter with the date your land will be released. It’s important to note that there is always a waiting period (half the duration of the covenant) to remove land from the program after the department receives your request, regardless of when the request is made.
Example 1: If you request withdrawal at year 10 of a 20-year covenant, you would be required to wait another 10 years (half the covenant length) before your enrollment is terminated at year 20.
Example 2: If you were to request withdrawal at year 20 of a 20-year covenant, you would be required to wait another 10 years (half the covenant length) before your enrollment is terminated, and therefore you would have been enrolled for 30 years in total.
During the waiting period, the covenant is still binding and you continue to receive payments as long as you continue to fill out and return your SFIA Certification Form to the MN Dept of Revenue each year.
Once you have withdrawn, you cannot re-enroll in SFIA for at least three years.
2. There are specific deadlines to keep in mind.
There are three important SFIA deadlines to be aware of: Enrollment, Yearly Certification, and Withdrawal.
ENROLLMENT: OCTOBER 31
For payments beginning the following year, your enrollment application must be submitted by October 31 of the current year. For example, to qualify for payments starting in 2022, you must enroll in the SFIA by October 31, 2021. Click here for the step-by-step SFIA enrollment process.YEARLY CERTIFICATION: JULY 1
Within the first two weeks of May during each year you are enrolled in the SFIA, you will receive a letter from the MN Department of Revenue that asks you to fill out a form and return it by July 1st to certify that your land meets SFIA requirements. This form is important - it will allow you to receive your SFIA payment for that calendar year. For example: you receive a certification letter in May 2021 — you must fill this out and return it to the MN Department of Revenue by July 1st, 2021 to receive the 2021 SFIA payment. Click here to see what this letter looks like.WITHDRAWAL: ½ OF A COVENANT LENGTH
As previously mentioned, if you’ve been enrolled in the program for at least one-half the duration of your chosen covenant length, you can request SFIA withdrawal by completing the SFIA Withdrawal Form. You will always have to fulfill the remaining half of your covenant length before termination can be completed, regardless of when you request termination.
EXAMPLES:
You request withdrawal at year 10 of a 20-year minimum covenant: withdrawal is complete and enrollment is terminated at year 20.
You request withdrawal at year 20 of a 20-year minimum covenant: withdrawal is complete and enrollment is terminated at year 30.
You request withdrawal at year 30 of a 20-year minimum covenant: withdrawal is complete and enrollment is terminated at year 40.
3. There are ways to withdraw from the SFIA early.
There are only a few exceptions that allow land to be released from the SFIA program early without penalty:
Death of a Claimant — Within one year after the death of the claimant, the claimant’s heir, devisee, or estate must notify the department to terminate enrollment. Attach a copy of the death certificate with this request.
Eminent Domain — Property in SFIA may be withdrawn from the program without penalty when the claimant (person or entity owning the property) requests withdrawal and the state of Minnesota, any local government unit, or any other entity meets all of the following criteria:
Title or possession to the land
Power of eminent domain over the land
Acquired title or possession to the land for a public purpose
Conservation Easement — If land is in a permanent conservation easement held by a government or nonprofit entity and the conservation easement is as restrictive as the SFIA covenant, the land will be allowed early withdrawal. You may withdraw only the affected acres. Acres that are enrolled in SFIA but not in a conservation easement must remain in SFIA. Attach a copy of the conservation easement with this request.
<10% Pay Rate Reduction – If state law is changed to reduce the SFIA payment rate more than 10% than what you received in the prior year, you may withdraw from the program without a waiting period.
Sources: Sustainable Forest Incentive Act (SFIA) Withdrawal Application, The Sustainable Forest Incentive Act 9b Fact Sheet.
Written by Marissa Berguson.
