Section 1535.20  4% Harvest Fee Determination

a)         When a timber buyer buys timber in this State, the timber buyer and timber grower shall determine the amount to be paid for such timber, or the value of items to be bartered for such timber, and the timber buyer shall deduct from the payment to the timber grower an amount which equals 4% of the purchase price or 4% of the minimum fair market value, as determined pursuant to administrative rule, when purchase price cannot otherwise be determined and shall forward such amount to the Department of Natural Resources. [225 ILCS 735/9a(a)]

EXAMPLE 1:

Harry Harvester, an Illinois Licensed Timber Buyer, recently won a bid to purchase $100,000 worth of timber from Larry Landowner, a Timber Grower.  Harry would report the sale to the Department and submit a payment of $4,000 for the Harvest Fee ($100,000 * 0.04 = $4,000).  Larry Landowner would receive a payment from Harry Harvester of $96,000 for his timber ($100,000 - $4,000 = $96,000).

EXAMPLE 2:

Harry Harvester, an Illinois Licensed Timber Buyer, is cutting timber on shares for Larry Landowner, a Timber Grower.  Harry paid Larry $50,000 for the timber removed from Larry's property.  Harry would report the sale to the Department and submit a payment of $2,000 for the Harvest Fee ($50,000 * 0.04 = $2,000).  Larry Landowner would receive a payment from Harry Harvester of $48,000 for his timber ($50,000 - $2,000 = $48,000).

EXAMPLE 3:

Larry Landowner, a Timber Grower, brings a small trailer of logs to Harry Harvester's sawmill, an Illinois Licensed Timber Buyer.  Harry pays Larry $300 for the logs.  Harry would report the sale to the Department and submit a payment of $12 for the Harvest Fee ($300 * 0.04 = $12).  Larry Landowner would receive a payment from Harry Harvester of $288 for his timber ($300 - $12 = $288).

EXAMPLE 4:

Harry Harvester, an Illinois Licensed Timber Buyer, sells $5,000 worth of logs he has purchased from multiple landowners to Sammy Sawmill, who is not an Illinois Licensed Timber Buyer.  Harry Harvester reported the sale to the Department and paid the harvest fee when he purchased the logs from the landowners and should not report the sale to Sammy Sawmill as this would result in duplicated reporting.

EXAMPLE 5:

Larry Landowner, a Timber Grower, is wanting to sell 20 walnut logs he recently cut from his property to Sammy Sawmill, who is not an Illinois Licensed Timber Buyer.  Sammy Sawmill should not purchase these logs from Larry Landowner because he is not an Illinois Licensed Timber Byer.  However, Sammy may purchase these logs if Larry Landowner has already reported the sale and paid the harvest fee to the Department.

b)         The value of timber purchased shall be the gross amount received by the timber grower and paid by the timber buyer for any interests involved in the timber purchase.

c)         When timber is purchased in whole or in part by barter, the fair market value of the bartered item or service used as payment for stumpage or logs to the timber grower shall be used in determining the harvest fee due the Department of Natural Resources.  Any payment made from any source shall require a 4% harvest fee payment to the Department.  The following formula shall be used:  Aggregate Value of Timber x 0.04 = 4% fee to be paid to the Department.

EXAMPLE:

Larry Landowner, a Timber Grower, has requested that Harry Harvester, an Illinois Licensed Timber Buyer, repair his gravel road on his property.  In lieu of payment for this service Larry will allow Harry to remove 20 mature poplar trees from his property.  Estimated stumpage value of the trees removed is $2,000.  Harry would report the sale to the Department and submit a payment of $80 for the Harvest Fee ($2,000 * 0.04 = $80).

d)         If timber is cut from an owner's land without establishing the amount to be paid or the bartered value of the stumpage or logs, such timber or logs shall be valued at stumpage value.

e)         For timber cut on lands owned by a timber grower or mill and used by that timber grower or mill in its production process, value will be the minimum fair market value.  The Illinois Timber Prices Survey, for the quarter when the timber was harvested, may, but is not required to, be used as a guide for determining value.

EXAMPLE:

Larry Landowner, a Timber Grower, decides to harvest 100 trees from his property.  He is planning on milling these trees into lumber and selling the lumber to local purchasers.  Larry estimates the stumpage value of these trees to be $12,500.  Larry is required to report this to the Department along with submitting a payment of $500 for the Harvest Fee ($12,500 * .04 = $500).  This report and payment must be made no later than 30 days from the end of the quarter in which the timber was harvested.  Note, if Larry uses the lumber for personal use he is not required to submit a report or payment to the Department.  Additionally, if after submitting a report and payment to the Department, Larry later decides to sell his logs to a sawmill, the sawmill should not report the sale to the Department nor submit a Harvest Fee as this would result in duplicated reporting.

(Source:  Amended at 48 Ill. Reg. 8643, effective May 30, 2024)