Agritourism Liability
We Advocate for Illinois Specialty GrowersAgritourism Farms Need Liability Protections in Illinois
Legislature Eases Liability Insurance Cost for Agritourism
Kay Shipman, Legislative Affairs Editor, FarmWeek
The General Assembly gave Illinois agritourism businesses some relief on liability insurance costs. Lawmakers passed legislation providing agribusinesses a $1,000 state income tax credit for liability insurance premiums and forwarded the provisions along with other tax measures to Gov. J.B. Pritzker.
For years, Illinois Specialty Growers Association and Illinois Farm Bureau have worked to address agritourism liability issues against stiff opposition from the Illinois Trial Lawyers Association (ITLA). After years of inaction due to ITLA opposition, Sen. Rachel Aud Crowe, D-Glen Carbon, and Senate President Don Harmon’s office, with help from Rep. Katie Stuart in the House, actively partnered with IFB and lobbied each chamber to deliver aid for agritourism. Stuart, D-Edwardsville, worked to pass relief for Liberty Apple Orchard and other agritourism businesses. “It’s really important to support these small businesses,” Stuart told FarmWeek. “The owners (of Liberty Orchard) and I have had numerous conversations. I understand their point of view about being outdoors (at the orchard) is the same risk as you being outdoors in your yard.”
Farmers in Illinois lead the nation in soybean, corn and swine production, but some also contribute to the state’s economy by offering immersive, recreational experiences to visitors through pumpkin patches, hayrides, tree farms, petting zoos and more, Crowe said. “As small business owners, agritourism operators truly make our state unique by attracting visitors to our communities to participate in authentic farm experiences,” Crowe said. “By offering state relief to agritourism operators for liability insurance premiums, Illinois is supporting the local businesses who promote economic growth statewide and play an important role in teaching our children and families the significance of agriculture in our daily lives.”
“This is huge for agritourism and local food,” said Mark Raney, IFB associate director of state legislation. “A lot of people want to enjoy these activities, but liability insurance is a huge barrier into this niche market given how expensive it is.” Raney noted a recent USDA report showed 85% of agritourism businesses earn less than $25,000. “These are small businesses,” he added. However, the state Trial Lawyers Association long fought efforts to provide agritourism businesses limited liability protection rather than go to court, Raney explained.
“Specialty growers are unique in that we grow fruits, vegetables and herbs for direct use by Illinois families, while also inviting our guests to enjoy a fun, educational experience on our farms,” said Randy Graham, president of the Illinois Specialty Growers Association (ISGA). Because specialty growers work in agriculture and tourism, they “incur a higher liability risk than most,” he noted. Graham thanked Crowe and Stuart for understanding specialty growers’ needs and their work to ensure passage of the liability insurance tax credit. He also pointed to the partnership success of IFB and ISGA.
The legislation defines agritourism businesses that would be eligible for the liability insurance tax credit and specifies services that would not meet the law’s criteria. Raney explained qualified agritourism businesses would need certification from the Illinois Department of Agriculture after it adopts new rules. Eligible agritourism businesses include those providing historic, cultural and on-site educational programs, tours, animal exhibitions and petting zoos, crop mazes, U-pick harvesting, horse rides, hayrides and sleighrides. Under the law, ineligible businesses solely offer hunting, fishing, rodeos, amusement rides, off-road biking or motorized activities, outdoor recreation and serve as wedding and concert venues.
For agritourism businesses, the liability insurance is very expensive. “We hope the income tax credit will alleviate that burden,” said Raghela Scavuzzo, IFB associate director of food systems development and ISGA executive director. “We hope this credit will incentivize them to continue doing business and will stimulate new agribusinesses.”
Agritourism Tax Credit Takes Sting Out of Liability Insurance Cost
Kay Shipman, Legislative Affairs Editor, FarmWeek
For the first time, Illinois agritourism businesses may apply for a liability insurance tax credit. Feb. 28 is the application deadline for 2022 taxes. Illinois is offering the tax credit because it doesn’t offer limited liability insurance to agritourism operations and wants to help farmers and families grow these agribusinesses, said Hannah McGee, a grant administrator with Illinois Department of Agriculture’s Bureau of Marketing, Promotion and Grants. Eligible agritourism businesses may apply to receive a tax credit for 100% of their liability insurance premiums up to $1,000.
By Jan. 25, McGee said she had approved 40 applicants that will receive roughly $33,000 in tax credit for 2022 and certified another five applicants that will receive about $4,000 in tax credit for 2023 taxes. She wasn’t certain how many agritourism businesses may apply for the insurance credit this year. “We’re wanting to spread the word,” she told FarmWeek. McGee outlined three criteria that determine eligibility for the liability insurance tax credit.
An agritourism business must be located in Illinois and file Illinois income taxes. For those that also operate in a bordering state, the other state would not accept an Illinois tax credit, she noted.
The agritourism business must be operated on an agricultural property. McGee used an example of a business offering horse carriage rides. If a business only offers rides as wedding rentals, parades or town tours, that operation would not be considered an agritourism business. However, one that offers carriage rides on a farm would be considered an agritourism operation.
A farm must offer agritourism activities to qualify. For example, a farm that grows pumpkins must also offer a tourism activity, such as a u-pick option, corn maze or some educational activity.
McGee added the state law also specifies activities that are not considered agritourism. Those include hunting, fishing, amusement rides, rodeos, hiking and off-road motor vehicles and their related activities.
To apply online for the agritourism liability tax credit, visit illinoisagritourismcredit.com. Applicants will find a variety of information, including definitions and qualified activities.
To receive a paper application, call 217-785-5710.
Applicants need to supply their tax identification or employer identification number (EIN). If a Social Security number is requested, McGee said an applicant needs to only submit the last four digits.
Applicants need to specify which tax form they will use to file their Illinois income taxes and know about the liability insurance they pay. They must choose from a list of options the type of agritourism business they operate.
Applicants must upload proof of their liability insurance policy and proof they have made payments or paid their liability insurance.
Applications are processed within a week of being received. Approved applications receive an email certification and a paper copy in the mail.
Application questions may be emailed directly to agr.agritourismtax@illinois.gov.
As for this year’s state taxes, “the Illinois Department of Revenue (IDOR) is aware of the certificate and knows when they come in, it is to be expected,” McGee said. “If any issues happen (when agritourism businesses) file and they get IDOR questions, the Illinois Department of Agriculture is working with IDOR.” She recommended referring IDOR questions to agr.agritourismtax@illinois.gov.
Agritourism is a growing business opportunity for farmers in Illinois and offers family-friendly on-farm experiences for visitors interested in food and rural life. But running an agritourism business is not without challenges and risk.When it comes to liability protection, Illinois agritourism farms are being treated differently than other businesses. Here, pumpkin patches, apple orchards, berry farms and wineries, lack the limited liability protection that 31 other states lawfully provide, including neighboring Indiana, Missouri, Kentucky and Wisconsin.
YOU Can Support Agritourism
Agritourism Act Provides Protection
Illinois farmers, Illinois Specialty Growers Association, and Illinois Farm Bureau have been working to pass the proposed Agritourism Liability Act (SB 3107) to grant farms the same limited liability protections currently in place for hockey and baseball facilities, skating rinks and equine activities. It eases liability concerns for inherent risks associated with outdoor farm environments, such as weather, trees, insects, and animals, as well as when visitors defy safety instructions or fail to use reasonable caution.
Lack of Protection Limits Growth
The lack of limited liability protection stifles agritourism growth in Illinois, a state rich in farmland and consumer demand for on-farm experiences, says Randy Graham, president of the Illinois Specialty Growers Association. The industry’s revenue almost doubled between 2007 and 2017, growing at an average rate of 7% annually, but the number of agritourism locations has not kept pace, GROWING AT LESS THAN 1% PER YEAR.
WE ESTABLISH A POWERFUL COMMON VOICE TO ADVOCATE FOR THE INDUSTRY.
There are over 3,600 established specialty crop farms in Illinois. These farms utilize more than 81,250 acres to produce over $472 million in sales annually within Illinois. The Illinois Specialty Growers Association advocates for regulation and policy at the county, state, and national levels for the industry. Together we are the voice that ensures the success of the industry.
WE ARE ALLIED MEMBERS OF THE INTERNATIONAL FRESH PRODUCE ASSOCIATION
As a specialty crop association member of the International Fresh Produce Association, we help to make ensure the industry’s voice is heard from Capitol Hill to the homes of consumers. This includes a dedicated government relations staff that can help navigate the issues affecting members. We serve as the leadership of the Specialty Crop Farm Bill Alliance, which works to ensure that the Farm Bill includes resources for the fresh produce industry. ISGA serves on the Government Relations Council, which provides leadership on the association’s legislative and regulatory priorities.